Form 8-K Blueprint Medicines Corp For: Jul 28

Exhibit 10.1

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[***] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) INFOMRATION THAT THE COMPANY TREATS AS PRIVATE OR CONFIDENTIAL.

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Execution Version

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Collaboration and License Agreement

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This Agreement is entered into with effect as of the Effective Date (as defined below)

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by and between

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F. Hoffmann-La Roche Ltd

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with an office and place of business at Grenzacherstrasse 124, 4070 Basel, Switzerland ("Roche Basel")

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and

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Hoffmann-La Roche Inc.

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with an office and place of business at 150 Clove Road, Suite 8, Little Falls, New Jersey 07424, U.S.A. ("Roche US"; Roche Basel and Roche US together referred to as "Roche")

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on the one hand

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and

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Blueprint Medicines Corporation

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with an office and place of business at 38 Sidney Street, Suite 200, Cambridge, Massachusetts 02139, U.S.A. ("BPM")

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on the other hand.

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Table of Contents

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Collaboration and License Agreement

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WHEREAS, BPM owns or controls a proprietary uniquely annotated small molecule library addressing the entire kinome, including well-characterized library sub-sets suited for screening purposes, and provides significant chemistry and preclinical development expertise and experience in bringing hits from this library through lead optimization and GLP Tox Studies to Phase I Study in an efficient manner; and

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WHEREAS, BPM has proprietary bioinformatics expertise including algorithms for mining of genomic information which supports elucidation of new targets or provides differentiated insights on biology of known targets; and

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WHEREAS, Roche has expertise in the research, development, manufacture and commercialization of pharmaceutical products, and owns or controls […***…]; and

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WHEREAS, Roche is a leader in the field of cancer immunotherapy clinical development including combination trials; and

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WHEREAS, Roche and BPM wish to combine their respective expertise to develop products against three (3) selected targets ([…***…], […***…] and […***…]) as well as up to an additional two (2) targets selected from a collaboratively shared screening and target validation effort based on BPM Technology (defined below) and Roche’s proprietary assays and know-how in cancer immunotherapy; and

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WHEREAS, BPM is willing to grant to Roche rights to opt-into each of these five (5) programs at a defined point in time and to use BPM’s intellectual property rights to Exploit Collaboration Compounds, Products and Licensed Products in the Territory for use in the Field (as such terms are respectively defined below), as contemplated herein; and

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WHEREAS, Roche and BPM agree that BPM will perform certain activities to Exploit the Collaboration Compounds, Products and Licensed Products for use in the Field (as such terms are respectively defined below).

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NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

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1.    Definitions

As used in this Agreement, the following terms, whether used in the singular or plural, shall have the following meanings:

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1.1    Affiliate

The term “Affiliate” shall mean, with respect to a Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. As used in this definition of “Affiliate,” the term “control” shall mean the direct or indirect ownership of more than fifty percent

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(>50%) of the stock having the right to vote for directors thereof or the ability to otherwise control the management of such Person whether through the ownership of voting securities, by contract, resolution, regulation or otherwise. Anything to the contrary in this paragraph notwithstanding, neither […***…] and/or its subsidiaries (if any) nor […***…] and/or its subsidiaries (if any) shall be deemed as Affiliates of Roche unless Roche provides written notice to BPM of its desire to include […***…] and/or their respective subsidiaries (as applicable) as Affiliate(s) of Roche.

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1.2    Agreement

The term “Agreement” shall mean this document including any and all appendices and amendments to it as may be added and/or amended from time to time in accordance with the provisions of this Agreement.

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1.3    Agreement Term

The term “Agreement Term” shall mean the period of time commencing on the Effective Date and, unless this Agreement is terminated sooner as provided in Article 21, expiring on the date when no royalty or other payment obligations under this Agreement are or will become due.

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1.4    Allocable Overhead

The term “Allocable Overhead” shall mean costs incurred by a Party or for its account which are attributable to a Party’s supervisory or support services / functions, occupancy costs, corporate bonus (to the extent not charged directly to department), and its payroll, information systems, human relations or purchasing functions and which are allocated to company departments based on space occupied or headcount or other activity-based method.  Allocable Overhead shall not include any costs attributed to a Party’s direct personnel costs or Out of Pocket Costs or to general corporate activities including, by way of example, executive management, investor relations, business development, legal affairs and finance.

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1.5    Animal POC

The term “Animal POC” shall mean the demonstration of efficacy of Collaboration Compounds in at least one animal model performed by or on behalf of Roche during Lead Optimization.

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1.6    Applicable Law

The term “Applicable Law” shall mean any law, statute, ordinance, code, rule or regulation that has been enacted by a government authority (including without limitation, any Regulatory Authority) and is in force as of the Effective Date or comes into force during the Agreement Term, in each case to the extent that the same is applicable to the Parties’ respective rights or the performance by the Parties of their respective obligations under this Agreement.

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1.7    Backup Compound

The term “Backup Compound” shall mean, on a Collaboration Target-by-Collaboration Target basis, any Collaboration Compound made under the Research Plan for a given Collaboration Target that is intended to replace a more advanced Collaboration Compound in the event development of such more advanced Collaboration Compound is terminated, […***…].

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1.8    BPM Group

The term “BPM Group” shall mean collectively BPM, its Affiliates and its Sublicensees.

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1.9    BPM IP

The term “BPM IP” shall mean (a) Know-How and Patent Rights that BPM and its Affiliates Control (i) as of the Effective Date, and/or (ii) during the Agreement Term to the extent used by BPM or its Affiliates to perform activities under this Agreement (but excluding Supplemental Studies

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unless Roche opts-in pursuant to Section 7.2), (b) BPM’s interest in any Joint IP, and (c) BPM Sole IP, and in each case ((a) through (c)) that are necessary or useful for the Exploitation of Collaboration Compounds, Products or Licensed Products, but excluding BPM Technology, Collaboration Compound IP and Other Compound IP. The foregoing Patent Rights in the BPM IP shall be listed in Appendix 1.9 of this Agreement and updated from time to time (but failure to list same will not exclude them as BPM IP).  For clarity, after any Change of Control of BPM, no Know-How or Patent Rights of any BPM Affiliate that becomes a BPM Affiliate after the Change of Control of BPM shall become “BPM IP” hereunder unless such Know-How or Patent Rights are intentionally used by BPM in BPM’s performance of research, development or commercialization activities under this Agreement.  

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1.10   BPM Net Sales

The term “BPM Net Sales” shall mean the net sales on behalf of BPM and any of its Affiliates or Sublicensees for any Licensed Product sold to Third Parties (other than Sublicensees) in bona fide, arms-length transactions, as determined in accordance with GAAP, less the following deductions:  (a) normal trade and cash discounts, (b) amounts repaid or credited by reasons of defects, rejections, recalls or returns, (c) rebates and chargebacks to customers and Third Parties (including Medicare, Medicaid, Managed Healthcare and similar types of rebates), (d) any amounts recorded in gross revenue associated with goods provided to customers for free, (e) amounts provided or credited to customers through coupons and other discount programs, (f) delayed ship order credits, discounts or payments related to the impact of price increases between purchase and shipping dates, (g) fee for service payments to customers for any non-separable services (including compensation for maintaining agreed inventory levels and providing information), (h) a fixed deduction of […***…] for direct expenses related to the sales of Licensed Product(s) for distribution and warehousing expenses and uncollectible amounts on previously sold Licensed Products, (i) taxes and any other governmental charges or levies imposed upon or measured by the Exploitation of a Licensed Product (excluding income or franchise taxes) as well as government mandated fees and taxes and other government charges, including any fees, taxes or other charges specifically attributable to a Licensed Product that become due in connection with any healthcare reform, change in government pricing or discounting schemes, or other action of a government or regulatory body, and (j) other reductions or specifically identifiable amounts deducted for reasons similar to those listed above in accordance with GAAP.  For clarity, no deduction may be taken more than once in the calculation of BPM Net Sales.

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In the case of any sale or other disposal of a Licensed Product between or among BPM and any of its Affiliates or Sublicensees, for resale, BPM Net Sales shall be calculated only on the value charged or invoiced on the first arm’s-length sale thereafter to a Third Party (other than a Sublicensee).  In the case of any sale that is not invoiced or is delivered before invoice, BPM Net Sales shall be calculated at the time all the revenue recognition criteria under GAAP are met.  Notwithstanding the foregoing, the following will not be included in BPM Net Sales: (i) sales between or among BPM and its Affiliates or Sublicensees (but BPM Net Sales will include sales to the first Third Party (other than a Sublicensee) by BPM or its Affiliates or Sublicensees); (ii) samples of Licensed Product used to promote additional BPM Net Sales, in amounts consistent with normal business practices of BPM or its Affiliates or Sublicensees; and (iii) disposal or use of Licensed Products in Clinical Studies or under compassionate use, patient assistance, named patient use, or test marketing programs or non-registrational studies or other similar programs or studies where the Licensed Product is supplied without charge or at the actual manufacturing cost thereof (without allocation of indirect costs or any mark-up).

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With respect to a Combination Product, BPM Net Sales of such Combination Product eligible for royalties shall be adjusted to subtract the Relative Commercial Value of any Other Component of such Combination Product in accordance with Section 12.9.4.

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To the extent that BPM or its Affiliates or Sublicensees receives consideration other than or in addition to cash upon the sale of a Licensed Product, or the performance of any services (including preliminary treatments or follow-up treatments) related to such Licensed Product, BPM Net Sales will include the fair market value of such additional consideration.

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1.11   BPM Patent Rights

The term “BPM Patent Rights” shall mean all Patent Rights contained in the BPM IP.

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1.12   BPM Sole IP

The term “BPM Sole IP” shall mean all Patent Rights and Know-How arising from a BPM Invention.

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1.13   BPM Technology

The term “BPM Technology” shall mean BPM’s proprietary library (in the form as of the Effective Date or during the Research and Development Term) and related Patent Rights and Know-How against the kinome and its annotation.

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1.14   BPM Territory

The term “BPM Territory” shall mean, with respect to Program 2 and Program 4, the US.

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1.15   Business Day

The term “Business Day” shall mean 9:00am to 5:00pm local time on a day other than a Saturday, Sunday or bank or other public or federal holiday in Switzerland or Massachusetts, US.

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1.16   Calendar Quarter

The term “Calendar Quarter” shall mean each period of three (3) consecutive calendar months, ending March 31, June 30, September 30, and December 31.

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1.17   Calendar Year

The term “Calendar Year” shall mean the period of time beginning on January 1 and ending December 31, except for the first year which shall begin on the Effective Date and end on December 31.

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1.18   CCS Criteria

The term “CCS Criteria” shall mean the criteria set forth in Appendix 1.18 of this Agreement that constitute clinical candidate selection, unless such criteria are modified by the JRC.

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1.19   Change of Control

The term “Change of Control” shall mean, with respect to a Party: (a) the acquisition (in a transaction or series of related transactions) by any Third Party, together with its Affiliates, of beneficial ownership of fifty percent (50%) or more of the then outstanding securities or combined voting power of such Party, other than acquisitions by employee benefit plans sponsored or maintained by such Party; (b) the consummation of a business combination (including a merger or consolidation) involving such Party with a Third Party, unless, following such business combination, the stockholders of such Party immediately prior to such business combination beneficially own directly or indirectly more than fifty percent (>50%) of the then outstanding securities or combined voting power of the surviving entity or the parent of the surviving entity immediately after such business combination; or (c) the sale or other transfer to a Third Party of

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all or substantially all of such Party’s and its Affiliates’ assets or business relating to the subject matter of the Agreement.

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1.20   Change of Control Group

The term “Change of Control Group” shall mean with respect to a Party, the person or entity, or group of persons or entities, that is the acquirer of, or a successor to, a Party in connection with a Change of Control, together with affiliates of such persons or entities that are not Affiliates of such Party immediately prior to the completion of such Change of Control of such Party.

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1.21   Clinical Study

The term “Clinical Study” shall mean any Phase I Study, Phase II Study, Phase III Study, Pivotal Study, Post-Marketing Study, Supplemental Study or other study in humans to obtain information regarding the product, including information relating to the safety, tolerability, pharmacological activity, pharmacokinetics, dose ranging or efficacy of the product, as applicable.

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1.22   CLS Achieved

The term “CLS Achieved” shall mean that a Product contains a Collaboration Compound meeting the CLS Criteria, unless such criteria are modified by the JRC.

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1.23   CLS Criteria

The term “CLS Criteria” shall mean the criteria set forth in Appendix 1.23 of this Agreement that constitute clinical lead selection, unless such criteria are modified by the JRC.

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1.24   Collaboration Compound

The term “Collaboration Compound” shall mean any compound made under the Research Plan for a given Collaboration Target that satisfies the Compound Criteria. A Collaboration Compound includes all salts, polymorphs, metabolites, prodrugs, isomers, enantiomers and stereoisomers of such Collaboration Compound, in each case that satisfies the Compound Criteria.  

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1.25   Collaboration Compound IP

The term “Collaboration Compound IP” shall mean all Patent Rights and Know-How Covering Collaboration Compounds and that is generated by either Party individually or both Parties jointly pursuant to a Research Plan or Phase I Plan.  

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1.26   Collaboration Target

The term “Collaboration Target” shall mean (i) each of […***…] (Uniprot […***…]), […***…] ([…***…] is Uniprot […***…] and […***…] is Uniprot […***…]) and […***…] (Uniprot […***…]) and (ii) each of the Targets selected from the Pool to pursue in Part 2 or mutually selected by the Parties in Part 2 […***…], for each of (i) and (ii) subject to exchange of such Target pursuant to Sections 4.1.5 or 4.1.6, as applicable.  For clarity, the Collaboration Targets shall not include any Excluded Targets, Leftover Targets or Terminated Targets.

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1.27   Combination Product

The term “Combination Product” shall mean

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(a)  a single pharmaceutical formulation (whether co-formulated or administered together via the same administration route) containing as its active ingredients both a Collaboration Compound and one or more other therapeutically or prophylactically active ingredients (each an “Other Component”), or

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(b)  a combination therapy comprised of a Collaboration Compound and one or more Other Component(s), whether priced and sold in a single package containing such multiple products, packaged separately but sold together for a single price, or sold under separate price points but labeled for use together.

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in each case, including all dosage forms, formulations, presentations, and package configurations.  Drug delivery vehicles, adjuvants and excipients will not be deemed to be “active ingredients”, except in the case where such delivery vehicle, adjuvant or excipient is recognized by the FDA as an active ingredient in accordance with 21 C.F.R. 210.3(b)(7).  All references to Products or Licensed Products in this Agreement shall be deemed to include Combination Products.

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1.28   […***…]

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1.29   Commercially Reasonable Efforts

The term “Commercially Reasonable Efforts” shall mean, with respect to the performance of an obligation under this Agreement, such level of efforts and resources consistent with the efforts Roche or BPM, as applicable, devotes to a similar obligation at the same stage of research, development or commercialization, as applicable, for its own internally developed pharmaceutical products in a similar area with similar market potential, at a similar stage of their product life, taking into account the existence of other competitive products in the market place or under development, the proprietary position of the product, the regulatory structure involved, the anticipated profitability of the product and other relevant factors. It is understood that such level of efforts or resources may change from time to time based upon changing scientific, business and marketing and return on investment considerations; provided, however, that the payments required to be made by a Party to the other Party pursuant to this Agreement will not be taken into account.

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However, Roche (and its Affiliates) does not always seek to market its own products in every country or seek to obtain Regulatory Approval in every country or for every potential Indication. As a result, the exercise of diligence by Roche under this standard is to be determined by judging Roche’s efforts in (i) the Major Countries, taken as a whole, and (ii) the Territory excluding the Major Countries, taken as a whole.

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1.30   Companion Diagnostic

The term “Companion Diagnostic” shall mean any product or service that:

(a)  identifies a person having a disease or condition, or a molecular genotype or phenotype that predisposes a person to such disease or condition, for which a Product or Licensed Product could be used to treat and/or prevent such disease or condition;

(b)  defines the prognosis or monitors the progress of a disease or condition in a person for which a Product or Licensed Product could be used to treat and/or prevent such disease or condition;

(c)  is used to select a therapeutic or prophylactic regimen, wherein at least one (1) potential therapeutic or prophylactic regimen involves a Product or Licensed Product, and where the selected regimen is determined, based on the use of such product or service, to likely be effective and/or to be safe for a person; and/or

(d)  is used to confirm a Product or Licensed Product’s biological activity and/or to optimize dosing or the scheduled administration of a Product or Licensed Product.

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1.31   Composition of Matter Claim

The term "Composition of Matter Claim" shall mean, for a given Licensed Product in a given country of the Territory, a Valid Claim of the Collaboration Compound IP or BPM IP or any Patent Rights owned or in-licensed by Roche or its Affiliates (only in the case of sales of Licensed Product

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in the BPM Territory for Program 2 and Program 4) that Covers the composition of matter of the Collaboration Compound that is included in such Licensed Product, in whole or as a component thereof.

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1.32   Compound Criteria

The term “Compound Criteria” shall mean the criteria, on a Collaboration Target-by-Collaboration Target basis, that are (i) determined by the JRC, (ii) approved by the Parties, and (iii) documented as part of the applicable Research Plan.

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1.33   Compulsory Sublicense Compensation

The term “Compulsory Sublicense Compensation” shall mean, for a given country or region, the compensation paid to the Roche Group or the BPM Group (as applicable) by a Third Party (a “Compulsory Sublicensee”) under a license or sublicense of any applicable Patent Rights granted to the Compulsory Sublicensee (the “Compulsory Sublicense”) through the order, decree or grant of a governmental authority having competent jurisdiction in such country or region, authorizing such Third Party to manufacture, use, sell, offer for sale, import or export a Licensed Product in such country or region.

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1.34   Confidential Information

The term “Confidential Information” shall mean any and all information, data or know-how (including Know-How), whether technical or non-technical, oral or written, that is disclosed by one Party or its Affiliates (“Disclosing Party”) to the other Party or its Affiliates (“Receiving Party”). Confidential Information shall not include any information, data or know-how that:

(i)    was generally available to the public at the time of disclosure, or becomes available to the public after disclosure by the Disclosing Party other than through fault (whether by action or inaction) of the Receiving Party or its Affiliates,

(ii)    can be evidenced by written records to have been already known to the Receiving Party or its Affiliates prior to its receipt from the Disclosing Party,

(iii)   is obtained by the Receiving Party at any time lawfully from a Third Party under circumstances permitting its use or disclosure,

(iv)   is developed independently by the Receiving Party or its Affiliates as evidenced by written records other than through knowledge of Confidential Information, or

(v)    is approved in writing by the Disclosing Party for release by the Receiving Party.

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The terms of this Agreement shall be considered Confidential Information of the Parties.

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1.35   Continuation Election Notice

The term “Continuation Election Notice” shall mean the notice BPM provides to Roche under Section 21.3.1 describing (i) BPM’s bona fide intention(s) to continue ongoing development and commercialization of Licensed Product(s) and (ii) BPM’s request for Roche’s continuation of activities during the termination period or transfer of the data, material and information relating to the Licensed Product(s) in accordance with Section 21.3.1.

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1.36   Control

The term “Control” shall mean (as an adjective or as a verb including conjugations and variations such as “Controls” “Controlled” or “Controlling”) (a) with respect to Patent Rights and/or Know-How, the possession by a Party of the ability to grant a license or sublicense of such Patent Rights and/or Know-How without violating the terms of any agreement or arrangement between such Party and any other party and (b) with respect to proprietary materials, the possession by a Party of the ability to supply such proprietary materials to the other Party as provided herein without violating the terms of any agreement or arrangement between such Party and any other party or

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without being obligated to pay any royalties or other consideration therefor, except for that which BPM or its Affiliates in-licenses and under which Roche elects to take a sublicense and agrees to make the associated payments pursuant to Section 2.4 which shall be considered under the Control of BPM or its Affiliates.  

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1.37   Cover

The term “Cover” shall mean (as an adjective or as a verb including conjugations and variations such as “Covered,” “Coverage” or “Covering”) that the Exploitation of a given compound, formulation or product would infringe a Valid Claim in the absence of a license under or ownership in the Patent Rights to which such Valid Claim pertains. The determination of whether a compound, formulation, process or product is Covered by a particular Valid Claim shall be made on a country-by-country basis.

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1.38   CRO

The term “CRO” shall mean a contract research organization or a contract manufacturing organization, a list of approved CROs is attached as Appendix 1.38, as such appendix may be amended or restated from time to time in accordance with the terms of this Agreement.

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1.39   Development Costs

The term “Development Costs” shall mean as to each Collaboration Target in the Field in the Territory, those (i) costs and expenses directly incurred (including personnel costs and Allocable Overhead associated with employees and contractors of a Party) with the performance of any clinical development activities (other than Phase I Studies) for Collaboration Compounds, Products or Licensed Products for such Collaboration Target, (ii) fees charged by Third Party service providers and other Out of Pocket Costs reasonably incurred in connection with the performance of any Clinical Study (other than Phase I Studies) with respect to Collaboration Compounds, Products, Licensed Products, or Companion Diagnostics for such Collaboration Target, and (iii) all costs associated with research or development of Companion Diagnostics, in each case, that are recorded as an expense in accordance with IFRS or GAAP as applicable and consistently applied. In addition, Development Costs shall include (A) the cost of additional studies on the toxicological, pharmacokinetic, metabolic or clinical aspects of such Product or Licensed Product conducted by individual investigators or consultants and (B) expenses for data management, statistical designs and studies, document preparation, and other expenses associated with the clinical testing program for additional studies. For clarity, Development Costs for each Product or Licensed Product shall include (a) manufacturing and supply costs and expenses associated with such Product or Licensed Product, and (b) costs related to preparing the initial regulatory dossier for such Product or Licensed Product.  All manufacturing and supply costs and expenses for Roche Clinical Compounds and Roche Marketed Products shall be at Roche’s sole expense.

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For clarity, Development Costs shall exclude (A) capital expenditures, (B) Phase I Development Costs, and (C) for Program 2 and Program 4, any costs and expenses associated with Supplemental Studies (other than Supplemental Studies that a Party opts-in to pursuant to Section 7.2).

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1.40   Development Plan

The term “Development Plan” shall mean, for each Program, the plan for the clinical development of Licensed Products for such Program in the Field in the Territory, which plan shall include a budget for each of Program 2 and Program 4 and the planned Clinical Studies for the […***…] Label Pursuits for each of Program 2 and Program 4.

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1.41   Effective Date

The term “Effective Date” shall mean March 14, 2016.

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1.42   EU

The term “EU” shall mean the European Union and all its then-current member countries.

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1.43   Excluded Field

The term “Excluded Field” shall mean […***…].

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1.44   Excluded Targets

The term “Excluded Targets” shall mean the Targets listed in Appendix 1.44 of this Agreement.

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1.45   Expert

The term “Expert” shall mean a person with no less than ten (10) years of pharmaceutical industry experience and expertise having occupied at least one senior position within a large pharmaceutical company relating to drug discovery, product development (in the case of Section 2.5.2) or commercialization and/or licensing (in the case of Section 12.9.4) but excluding any current or former employee or consultant of either Party or its Affiliates. Such person shall be fluent in the English language.

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1.46   Exploit

The term “Exploit” shall mean (including conjugations and variations such as “Exploiting” or “Exploitation”) to research, have researched, develop, have developed, register, have registered, use, have used, make, have made, import, have imported, export, have exported, market, have marketed, distribute, have distributed, sell, have sold and offer for sale and have offered for sale, including all research, development, manufacturing and commercialization activities.

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1.47   FBMC

The term “FBMC” shall mean the sum of (a) the cost of goods produced, determined in accordance with IFRS or GAAP guidelines as consistently applied by Roche or BPM in the ordinary course of its business, including direct labor, material, payments to Third Parties for costs incurred and product testing costs of Collaboration Compounds, Products or Licensed Products, as well as Allocable Overhead, and (b) any other Out of Pocket Costs borne by Roche or BPM for the packaging, transport, customs clearance, and storage of Collaboration Compounds, Products or Licensed Products (e.g., containers, freight, duties, insurance and warehousing).

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1.48   FDA

The term “FDA” shall mean the Food and Drug Administration of the United States of America.

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1.49   FDCA

The term “FDCA” shall mean the Food, Drug and Cosmetics Act.

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1.50   Field

The term “Field” shall mean any use other than the Excluded Field.

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1.51   Filing

The term “Filing” shall mean the filing of an application by the FDA as defined in the FDCA and applicable regulations, or the equivalent application to the equivalent agency in any other country or group of countries, the official approval of which is required before any lawful commercial sale or marketing of Licensed Products.

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1.52   First Commercial Sale

The term “First Commercial Sale” shall mean, on a country-by-country and Licensed Product-by-Licensed Product basis, the first commercial sale of a Licensed Product to a Third Party by the Roche Group or by the BPM Group, as applicable, in such country following the receipt of any Regulatory Approval required for the sale of such Licensed Product in such country, or if no such Regulatory Approval is required, the date of the first commercial sale of a Licensed Product in such country to a Third Party by (i) the Roche Group in such country or (ii) the BPM Group in the BPM Territory, as applicable.

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1.53   GAAP

The term “GAAP” shall mean US Generally Acceptable Accounting Principles.

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1.54   Generic Product

The term “Generic Product” shall mean, with respect to a particular Licensed Product and on a country-by-country basis, a generic pharmaceutical product that is marketed for sale by a Third Party (not licensed, supplied or otherwise permitted by the Roche Group or the BPM Group) and that: (i) (a) contains the same or substantially the same active ingredient as the Collaboration Compound in such Licensed Product; and (b) is approved for use in such country by a Regulatory Authority through an Abbreviated New Drug Application as defined in the FDCA, and the regulations promulgated thereunder, pursuant to Article 10.1 of Directive 2001/83/EC of the European Parliament and Council of 6 November 2001, or any enabling legislation thereof, or pursuant to any similar abbreviated route of approval in such country; or (ii) (a) contains the same or substantially the same active ingredient as the Collaboration Compound in such Licensed Product; and (b) is approved for use in such country by a Regulatory Authority through a regulatory pathway referencing clinical data first submitted by the Roche Group or the BPM Group for obtaining Regulatory Approval for such Licensed Product.

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1.55   Handle

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The term “Handle” shall mean preparing, filing, prosecuting (including interference and opposition proceedings) and maintaining (including interferences, reissue, re-examination, pre- and post-grant reviews, inter-parties reviews, derivation proceedings and opposition proceedings, patent term adjustment and extensions (including those arising from Regulatory Approvals), supplementary protection certificates and other similar proceedings), but not with respect to any infringement or other enforcement activities.

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1.56   IFRS

The term “IFRS” shall mean International Financial Reporting Standards.

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1.57   IND

The term “IND” shall mean an application as defined in the FDCA and applicable regulations promulgated by the FDA, or the equivalent application to the equivalent agency in any other country or group of countries, the filing of which is necessary to commence clinical testing of the Products and/or Licensed Products in humans.

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1.58   Indication

The term “Indication” shall mean a disease (i) for which the Licensed Product is indicated for treatment and (ii) that is described in the Licensed Product label as required by the Regulatory Approval granted by the applicable Regulatory Authority.  […***…].

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1.59   Initiation

The term “Initiation” shall mean the date that a human is first dosed with the Product or Licensed Product, as applicable, in a Clinical Study approved by the respective Regulatory Authority.

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1.60   Initiation of GLP Tox Study

The term “Initiation of GLP Tox Study” shall mean the date of the approval by the JRC of the final protocol for a study of the relationship between dose and its effects on the exposed animal, where (i) the study is to be conducted in accordance with Good Laboratory Practice standards and (ii) the study has been designed in expectation that the results may support establishment of a safe starting dose of the Product in human clinical studies (a “GLP Tox Study”).

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1.61   Insolvency Event

The term “Insolvency Event” shall mean circumstances under which a Party (i) has a receiver or similar officer appointed over all or a material part of its assets or undertaking; (ii) passes a resolution for winding-up (other than a winding-up for the purpose of, or in connection with, any solvent amalgamation or reconstruction) or a court makes an order to that effect or a court makes an order for administration (or any equivalent order in any jurisdiction); (iii) enters into any composition or arrangement with its creditors (other than relating to a solvent restructuring); (iv) ceases to carry on business; or (v) is unable to pay its debts as they become due in the ordinary course of business.

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1.62   Invention

The term “Invention” shall mean an invention that is conceived in connection with any activity carried out pursuant to this Agreement. Under this definition, but subject to Section 16.1, an Invention may be made by employees, consultants or contractors of BPM solely or jointly with a Third Party (a “BPM Invention”), by employees, consultants or contractors of the Roche Group solely or jointly with a Third Party (a “Roche Invention”), or jointly by employees, consultants or contractors of BPM and employees, consultants or contractors of the Roche Group with or without a Third Party (a “Joint Invention”).

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1.63   JDC

The term “JDC” shall mean the joint development committee that oversees all activities pursuant to the Phase I Plans and all clinical development of Licensed Products by the Parties after exercise of an Option Right, and is described in Section 8.2.

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1.64   Joint IP

The term “Joint IP” shall mean all Joint Patent Rights and Joint Know-How.

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1.65   Joint Know-How

The term “Joint Know-How” shall mean all Know-How that is conceived jointly by the Parties or their Affiliates or their Sublicensees in connection with any activity carried out pursuant to this Agreement.  For clarity, Joint Know-How shall include all Know-How within the Biomarker IP.

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1.66   Joint Patent Rights

The term “Joint Patent Rights” shall mean all Patent Rights arising from a Joint Invention.  For clarity, Joint Patent Rights shall include all Patent Rights within the Biomarker IP.

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1.67   JOT

The term “JOT” shall mean a joint operating team if established by the JRC under Section 8.4 or the JDC under Section 8.5.

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1.68   JRC

The term “JRC” shall mean the joint research committee that oversees all activities under the Research Plans, and is described in Section 8.1.

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1.69   Know-How

The term “Know-How” shall mean data, knowledge and information, including materials, samples, chemical manufacturing data, toxicological data, pharmacological data, preclinical data, assays, platforms, formulations, specifications, quality control testing data, that are necessary or useful for the discovery, manufacture, development or commercialization of Products and/or Licensed Products.

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1.70   Lead Nomination

The term “Lead Nomination” shall mean the preclinical development activities performed for each Collaboration Target at the beginning of Part 1 and for Collaboration Targets selected in Part 2 after Target Validation with the goal to identify Collaboration Compounds which satisfy the Lead Series Identified Criteria.

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1.71   Lead Optimization

The term “Lead Optimization” shall mean the preclinical development activities performed for each Collaboration Target following Lead Nomination, with the goal to identify Collaboration Compounds suitable for GLP Tox Studies and meeting CCS Criteria.

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1.72   Lead Series Identified Criteria

The term “Lead Series Identified Criteria” shall mean the lead series identified criteria set forth in Appendix 1.72 of this Agreement, unless such criteria are modified by the JRC.

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1.73   Leftover Targets

The term “Leftover Targets” shall mean those Collaboration Targets for which an Option Right has not been exercised by Roche, including those (i) in the Pool after the JRC’s right to replace Collaboration Targets in the Pool has ended pursuant to Section 4.1.6, and/or (ii) that have been replaced with a new Collaboration Target, or for which further preclinical development activities are not pursued under Part 2.

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1.74   Library Compound

The term “Library Compound” shall mean any compound included in BPM Technology but excluding any Other Compound or Collaboration Compound.

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1.75   Licensed Product

The term “Licensed Product” shall mean a Product to which Roche has exercised its Option Right to the corresponding Collaboration Target.  For clarity, a Reversion Product shall not be considered a Licensed Product.

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1.76   Major Countries

The term “Major Countries” shall mean […***…].

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1.77   […***…]

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1.78   MTD

The term “MTD” shall mean, for each Collaboration Target, the dose and schedule that will be used for the Product […***…] in the expansion part of the first Phase I Study or in the first Phase II Study, if no expansion is planned for the first Phase I Study. The MTD may be the maximum

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tolerated dose, as defined in the Phase I Study protocol for each Collaboration Target, or it may be a lower dose. The MTD for each Collaboration Target will be confirmed by the JDC.  

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1.79   NDA

The term “NDA” shall mean a new drug application, including all necessary documents, data, and other information concerning a Licensed Product, required for Regulatory Approval of the Licensed Product as a pharmaceutical product by the FDA or an equivalent application to the equivalent agency in any other country or group of countries (e.g. the marketing authorization application (MAA) in the EU).

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1.80   Net Sales

The term “Net Sales” shall mean, for a Licensed Product in a particular period, the amount calculated by subtracting from the Sales of such Licensed Product for such period: (i) a lump sum deduction of […***…] of Sales in lieu of those deductions that are not accounted for on a Licensed Product-by-Licensed Product basis (e.g., freight, postage charges, transportation insurance, packing materials for dispatch of goods, custom duties); (ii) uncollectible amounts accrued during such period based on a proportional allocation of the total bad debts accrued during such period and not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Licensed Product for such period; (iii) credit card charges (including processing fees) accrued during such period on such Sales and not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Licensed Product for such period; and (iv) government mandated fees and taxes and other government charges accrued during such period not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Licensed Product for such period, including, for example, any fees, taxes or other charges that become due in connection with any healthcare reform, change in government pricing or discounting schemes, or other action of a government or regulatory body. For clarity, no deductions taken in calculating Sales under Section 1.119 may be taken a second time in calculating Net Sales.

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With respect to a Combination Product, Net Sales of such Combination Product eligible for royalties shall be adjusted to subtract the Relative Commercial Value of any Other Component of such Combination Product in accordance with Section 12.9.4.

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To the extent that Roche or its Affiliates or Sublicensees receives consideration other than or in addition to cash upon the Sale of a Licensed Product, or the performance of any services (including preliminary treatments or follow-up treatments) related to such Licensed Product, Net Sales will include the fair market value of such additional consideration.

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1.81   Option Data Criteria

The term “Option Data Criteria” shall mean, for each Collaboration Target, the categories of information (including the criteria within such categories) for a Product in accordance with the Phase I Plan with respect to such Collaboration Target, which categories are set forth in Appendix 1.81, and the criteria within such categories will be determined on a Collaboration Target-by-Collaboration Target basis and finalized by the JDC prior to the filing of the first IND for such Collaboration Target.  

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1.82   Option Data Package

The term “Option Data Package” shall mean, for each Collaboration Target, (i) a document setting forth the available data resulting from the Phase I Studies conducted by BPM for such Collaboration Target, including the applicable Option Data Criteria, (ii) the availability of the data

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for such Phase I Studies in an organized and clean format in the Clinical Study database for such Collaboration Target through the Option Data Package Trigger for such Collaboration Target, and (iii) if applicable, the availability of the data of any Phase I Studies conducted by Roche in an organized and clean format for a […***…] through the Option Data Package Trigger for such […***…].  For clarity, “BPM’s Portion” of the Option Data Package shall mean the items set forth in clauses (i) and (ii) of this Section 1.82.

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1.83   Option Data Package Trigger

The term “Option Data Package Trigger” shall mean, for each Collaboration Target, the earlier of (a) the date the JDC has determined that the Option Data Criteria have been met, or (b) the cut-off date determined by the JDC pursuant to Section 3.1.3.

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1.84   Option Exercise Date

The term “Option Exercise Date” shall mean, on a Collaboration Target-by-Collaboration Target basis, the date on which an Option Exercise Notice delivered by Roche to BPM for such Collaboration Target pursuant to Section 3.1.3 takes effect.

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1.85   Option Exercise Notice

The term “Option Exercise Notice” shall mean the written notice Roche delivers to BPM to exercise its Option Right with respect to a Collaboration Target.

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1.86   Option Period

The term “Option Period” shall mean, for each Collaboration Target, the period beginning the date the MTD for the first Product for such Collaboration Target is designated by the JDC and ending upon the earliest of (i) the date that such Collaboration Target becomes a Leftover Target, (ii) […***…] after Roche’s receipt of the Option Data Package for such Collaboration Target, (iii) the date such Collaboration Target becomes a Terminated Target, (iv) the date upon which a Product (including Backup Compounds) for such Collaboration Target is no longer in GLP Tox Studies, in Phase I Studies, or progressing from GLP Tox Studies to Phase I Studies, or (v) […***…] after achievement of Lead Series Identified Criteria has been confirmed by the JRC for such Collaboration Target if Initiation of the GLP Tox Study has not been achieved for such Collaboration Target prior to such date.  

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1.87   Option Right

The term “Option Right” shall mean, with respect to a Collaboration Target, Roche’s right to obtain an exclusive (subject to BPM’s retained rights if applicable) commercial license with respect to that Collaboration Target in accordance with Section 3.1.

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1.88   Other Compound

The term “Other Compound” shall mean any compound made under the Research Plan for a given Collaboration Target that does not satisfy the Compound Criteria as determined by the JRC and is not a Library Compound as of the Effective Date.  An Other Compound includes all salts, polymorphs, metabolites, prodrugs, isomers, enantiomers and stereoisomers of such compound, in each case that do not satisfy the Compound Criteria and are not a Library Compound as of the Effective Date.

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1.89   Out of Pocket Costs

The term “Out of Pocket Costs” shall mean, with respect to certain activities hereunder direct expenses paid or payable by either Party or its Affiliates to Third Parties and specifically identifiable and incurred to conduct such activities for Collaboration Compounds, Products, Licensed Products or Companion Diagnostics, as applicable, including payments to contract

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personnel (including contractors, consultants, CROs and subcontractors) in each case pursuant to the Phase I Plans or Development Plans.

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1.90   Party

The term “Party” shall mean BPM or Roche, as the case may be, and “Parties” shall mean BPM and Roche collectively.

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1.91   Part 1

The term “Part 1” shall mean the activities under the Research Plan and Phase I Plan for the Collaboration Targets […***…], […***…], and […***…].

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1.92   Part 2

The term “Part 2” shall mean the activities under Screening, Target Validation and the Research Plans and Phase I Plans for the Targets selected for activities in Part 2 that become Collaboration Targets.

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1.93   Patent Rights

The term “Patent Rights” shall mean all rights under any patent or patent application, in any country of the Territory, including any patents issuing on such patent application, and further including any substitution, extension or supplementary protection certificate, reissue, reexamination, renewal, division, continuation or continuation-in-part of any of the foregoing.

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1.94   Person

The term “Person” shall mean any natural person, corporation, unincorporated organization, partnership, association, sole proprietorship, joint stock company, joint venture, limited liability company, trust or government, or any other similar entity.

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1.95   Pharmacovigilance Agreement

The term “Pharmacovigilance Agreement” shall mean an agreement entered into by the Parties to set forth the protocols and procedures for reporting adverse events and complying with reporting requirements set forth by Regulatory Authorities.

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1.96   Phase I Development Costs

The term “Phase I Development Costs” shall mean, with respect to each Phase I Plan, and subject to the cap in Section 5.1.3, those (i) costs and expenses directly incurred (including personnel costs and Allocable Overhead associated with employees and contractors of a Party)  with the performance of any Phase I Studies for Collaboration Compounds or Products for such Collaboration Target, (ii) costs associated with research or development of Companion Diagnostics, and (iii) fees charged by Third Party service providers and other Out-of-Pocket Costs reasonably incurred in connection with the performance of any Phase I Study with respect to Collaboration Compounds or Products for such Collaboration Target, in each case, in accordance with the applicable Phase I Plan and that are recorded as an expense in accordance with IFRS or GAAP as applicable consistently applied. Phase I Development Costs shall include (A) the cost of studies on the toxicological, pharmacokinetic, metabolic, pharmacodynamic or clinical aspects of such Product conducted by individual investigators or consultants in accordance with the applicable Phase I Plan and (B) expenses for data management, statistical designs and studies, document preparation, and other expenses associated with the clinical testing program for the applicable Phase I Plan.  For clarity, Phase I Development Costs for each Product shall include (i) manufacturing and supply costs and expenses associated with the Phase I Plan for such Product, and (ii) costs related to preparing and filing Filings associated with the Phase I Plan for such Product (including associated filing fees, translation expenses, and legal and other

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professional service fees).  All manufacture and supply costs and expenses for Roche Clinical Compounds and Roche Marketed Products shall be at Roche’s sole expense.  For clarity, Phase I Development Costs shall exclude (a) capital expenditures, and (b) Development Costs.

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1.97   Phase I Plan

The term “Phase I Plan” shall mean, for each Collaboration Target, a plan and budget describing the one or more Phase I Studies to be conducted with respect to such Collaboration Target in the Field that will be established and approved by the JDC, with the goal to provide the Option Data Package for such Collaboration Target.

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1.98   Phase I Program

The term “Phase I Program” shall mean the activities undertaken by the Parties pursuant to the Phase I Plans for all Collaboration Targets.

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1.99   Phase I Study

The term “Phase I Study” shall mean a human clinical trial in any country that would satisfy the requirements of 21 C.F.R. § 312.21(a) (FDCA), as amended from time to time, and the foreign equivalent thereof.

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1.100  Phase II Study

The term “Phase II Study” shall mean a human clinical trial, for which the primary endpoints include a determination of dose ranges and/or a preliminary determination of efficacy in patients being studied as described in 21 C.F.R. § 312.21(b) (FDCA), as amended from time to time, and the foreign equivalent thereof.

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1.101  Phase III Study

The term “Phase III Study” shall mean a human clinical trial that is prospectively designed to demonstrate statistically whether a product is safe and effective for use in humans in a manner sufficient to obtain regulatory approval to market such product in patients having the disease or condition being studied as described in 21 C.F.R. § 312.21(c) (FDCA), as amended from time to time, and the foreign equivalent thereof.

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1.102  Pivotal Study

The term “Pivotal Study” shall mean, with respect to any Licensed Product, a Clinical Study that at the time of commencement (or any later expansion of patient enrollment, if applicable), is expected by the JDC to be the basis for Regulatory Approval of such Licensed Product.  

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1.103  Post-Marketing Study

The term “Post-Marketing Study” shall mean a non-human or human clinical study of a Licensed Product initiated after receipt of Regulatory Approval for such Licensed Product in a country or territory, which is required by the Regulatory Authority in such country or territory to maintain the Regulatory Approval for such Licensed Product in such country or territory.

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1.104  Product

The term “Product” shall mean, on a Collaboration Target-by-Collaboration Target basis, any pharmaceutical product that, prior to Roche’s exercise of its Option Right for such Collaboration Target, contains a Collaboration Compound with respect to such Collaboration Target generated under a Research Plan, including without limitation any Combination Product. One Product can be distinguished from another Product by containing a different Collaboration Compound as its active pharmaceutical ingredient. For clarity, a Reversion Product will not be considered a Product.

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1.105  Program

The term “Program” shall mean the program to develop and commercialize Licensed Products directed to a specific Collaboration Target in the Field in the Territory.  Subject to the program switch right in Section 3.1.4, a Program shall be numbered in accordance with the order in which Roche exercises its Option Right so that “Program 1” is the Program to develop and commercialize Licensed Products directed to the first Collaboration Target for which Roche exercises its Option Right; “Program 2” is the Program to develop and commercialize Licensed Products directed to the second Collaboration Target for which Roche exercises its Option Right; “Program 3” is the Program to develop and commercialize Licensed Products directed to the third Collaboration Target for which Roche exercises its Option Right; “Program 4” is the Program to develop and commercialize Licensed Products directed to the fourth Collaboration Target for which Roche exercises its Option Right; and “Program 5” is the Program to develop and commercialize Licensed Products directed to the fifth Collaboration Target for which  Roche exercises its Option Right.

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1.106  Regulatory Approval

The term “Regulatory Approval” shall mean any approvals, licenses, registrations or authorizations by Regulatory Authority, necessary for the manufacture and sale of a Licensed Product in the Field in a regulatory jurisdiction in the Territory.

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1.107  Regulatory Authority

The term “Regulatory Authority” shall mean any national, supranational (e.g., the European Commission, the Council of the European Union, the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity including the FDA, in each country involved in the granting of Regulatory Approval for the Licensed Product.

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1.108  Research Plan

The term “Research Plan” shall mean, for each Collaboration Target, a plan describing the screening activities and preclinical development of Library Compounds, Other Compounds and Collaboration Compounds (including Backup Compounds) for such Collaboration Target in the Field up to and including GLP Tox Studies and that is approved by the JRC. Each Research Plan shall also comprise the properties and their related criteria to be measured at defined points of preclinical development.

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1.109  Research and Development Term

The term “Research and Development Term” shall mean the period beginning upon the Effective Date and ending upon the earlier of (i) the exercise of the last Option Right available for exercise, or (ii) the expiration of the Option Period for the last Collaboration Target available for exercise.

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1.110  Roche Clinical Compounds

The term “Roche Clinical Compounds” shall mean clinical-stage compounds controlled by Roche or its Affiliates (but not Products or Licensed Products) and provided for combination Clinical Studies with Products or Licensed Products.  

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1.111  Roche Group

The term “Roche Group” shall mean collectively Roche, its Affiliates and its Sublicensees.

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1.112  Roche Know-How

The term “Roche Know-How” shall mean (a) all Know-How that Roche and its Affiliates Controls as of the Effective Date or during the Agreement Term to the extent used by Roche or its Affiliates to perform activities under this Agreement (including Roche Sole IP and Roche’s interest in Joint IP) (but excluding Supplemental Studies unless BPM opts-in pursuant to Section 7.2), and (b) with respect to Program 2 and Program 4, any Know-How that Roche or its Affiliates uses in Exploiting any Licensed Products for Program 2 and Program 4 (as applicable) (but excluding Supplemental Studies unless Roche opts-in pursuant to Section 7.2), and in each case (a) and (b) that is necessary or useful to perform activities under this Agreement.

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1.113  Roche Marketed Products

The term “Roche Marketed Products” shall mean marketed products controlled by Roche or its Affiliates (but not Products or Licensed Products) and provided for combination Clinical Studies with Products or Licensed Products.  

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1.114  Roche Patent Rights

The term “Roche Patent Rights” shall mean (a) all Patent Rights that Roche and its Affiliates Controls as of the Effective Date or during the Agreement Term to the extent used by Roche or its Affiliates to perform activities under this Agreement (including Roche Sole IP and Roche’s interest in Joint IP) (but excluding Supplemental Studies unless BPM opts-in pursuant to Section 7.2), and (b) with respect to Program 2 and Program 4, any Patent Rights that Roche or its Affiliates uses in Exploiting any Licensed Products for Program 2 and Program 4 (as applicable) (but excluding Supplemental Studies unless Roche opts-in pursuant to Section 7.2), and in each case (a) and (b) that are necessary or useful to perform the activities under this Agreement.  The Patent Rights identified in Appendix 1.114 (“Excluded Patent Rights”) are specifically excluded from the Roche Patent Rights.

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1.115  Roche Sole IP

The term “Roche Sole IP” shall mean all Patent Rights and Know-How arising from a Roche Invention and all […***…].

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1.116  Roche Territory

The term “Roche Territory” shall mean (a) in the case of Program 1, Program 3, and Program 5, all countries of the world, and (b) in the case of Program 2 and Program 4, ROW.

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1.117  ROW

The term “ROW” shall mean all countries of the world excluding the US.

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1.118  Royalty Term

The term “Royalty Term” shall mean, for each Licensed Product, on a country-by-country basis, the period of time beginning with First Commercial Sale of a Licensed Product in a country and ending on the latest of (i) […***…] after First Commercial Sale in such country of such Licensed Product, (ii) the last to expire Composition of Matter Claim, and (iii) the end of any regulatory exclusivity for such Licensed Product. To the extent the only Valid Claim in the Collaboration Compound IP or BPM IP or any patent rights owned or in-licensed by Roche (only pursuant to Program 2 or Program 4) Covers an approved use of a Licensed Product, the Royalty Term shall expire on a country-by-country basis on the later of (a) […***…] after First Commercial Sale in such country of such Licensed Product or (b) the end of the first Calendar Quarter in which a Generic Product enters the market in such country.

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1.119  Sales

The term “Sales” shall mean, for a Licensed Product in a particular period, the sum of (i) and (ii):

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(i)   the amount stated in the Roche Holding AG “Sales” line of its externally published audited consolidated financial statements with respect to such Licensed Product for such period (excluding sales to any Sublicensees that are not Affiliates of Roche). This amount reflects the gross invoice price at which such Licensed Product was sold or otherwise disposed of (other than for use as clinical supplies or free samples) by Roche and its Affiliates to such Third Parties (excluding sales to any Sublicensees that are not Affiliates of Roche) in such period reduced by gross-to-net deductions, if not previously deducted from such invoiced amount, taken in accordance with the then currently used IFRS.

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By way of example, the gross-to-net deductions taken in accordance with IFRS as of the Effective Date include the following:

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(a)      credits, reserves or allowances granted for (i) damaged, outdated, returned, rejected, withdrawn or recalled Licensed Product, (ii) wastage replacement and short-shipments; (iii) billing errors and (iv) indigent patient and similar programs (e.g., price capitation);

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(b)      governmental price reductions and government mandated rebates;

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(c)      chargebacks, including those granted to wholesalers, buying groups and retailers;

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(d)      customer rebates, including cash sales incentives for prompt payment, cash and volume discounts; and

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(e)      taxes and any other governmental charges or levies imposed upon or measured by the import, export, use, manufacture or sale of a Licensed Product (excluding income or franchise taxes).

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For purposes of clarity, sales by Roche and its Affiliates to any Sublicensee shall be excluded from “Sales”.  

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(ii)  for Sublicensees that are not Roche Affiliates (and excluding Compulsory Sublicensees), the sales amounts reported to Roche and its Affiliates in accordance with the Sublicensee contractual terms and their then-currently used accounting standards. For the purpose of clarity, any such Sublicensee sales as reported to Roche in accordance with Compulsory Sublicense agreements shall be excluded from the sales amount.

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1.120  Screening

The term “Screening” shall mean the activities performed jointly by Roche and BPM at the beginning of Part 2 in accordance with this Agreement. The JRC shall approve the Screening plan and any changes thereto.

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1.121  Screening Hit

The term “Screening Hit” shall mean any Library Compound identified as a hit after Screening.

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1.122  Sublicensee

The term “Sublicensee” shall mean an entity to which Roche or BPM, as applicable, has licensed or sublicensed rights (through one or multiple tiers), other than through a Compulsory Sublicense, pursuant to this Agreement.

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1.123  Target

The term “Target” shall mean any protein identified by its Entrez/HUGO number, including all splice variants, mutants, natural variants, and the like reasonably associated with such Entrez/HUGO number, which may be inhibited or modulated by Library Compounds, Other Compounds, Collaboration Compounds, Products, and/or Licensed Products.

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1.124  Target Hypothesis

The term “Target Hypothesis” shall mean any hypothesis for a Screening Hit established by both Parties.

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1.125  Target Validation

The term “Target Validation” shall mean the activities, including further in vitro assays, performed jointly by Roche and BPM following Screening in Part 2 to achieve validation of the Collaboration Targets for which a Target Hypothesis has been established. The JRC shall approve the Target Validation plan and any changes thereto.

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1.126  Terminated Target

The term “Terminated Target” shall mean any Collaboration Target that has under Section 21.3.1 become a “Terminated Target.”

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1.127  Territory

The term “Territory” shall mean (i) with respect to Roche, the Roche Territory, and (ii) with respect to BPM, the BPM Territory.

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1.128  Third Party

The term “Third Party” shall mean a person or entity other than (i) BPM or any of its Affiliates or (ii) a member of the Roche Group.

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1.129  US

The term “US” or “United States” shall mean the United States of America and its territories and possessions.

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1.130  US$

The term “US$” shall mean US dollars.

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1.131  Valid Claim

The term “Valid Claim” shall mean a claim in any (i) unexpired and issued patent that has not been disclaimed, revoked or held invalid by a final non-appealable decision of a court of competent jurisdiction or government agency, or (ii) pending patent application being prosecuted in good faith and has been pending for no more than […***…] from the earliest priority date.

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1.132  Additional Definitions

Each of the following definitions is set forth in the Section of this Agreement indicated below:

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2.     Grant of License and Exclusivity

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2.1     Licenses

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2.1.1   Research Cross Licenses

Subject to the terms and conditions of this Agreement, Roche hereby grants to BPM a non-transferable (except as provided in Section 23.4), sublicensable (subject to Section 2.3.2), non-exclusive license under Roche Know-How and Roche Patent Rights for BPM to perform its research activities under the Research Plans and development activities under the Phase I Plans, in each case in the Field and during the Research and Development Term.

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Subject to the terms and conditions of this Agreement, BPM hereby grants to Roche a non-transferable (except as provided in Section 23.4), sublicensable (subject to Section 2.3.1), non-exclusive license under BPM IP and Collaboration Compound IP for Roche to perform its research activities under the Research Plans and development activities under the Phase I Plans, in each case in the Field and during the Research and Development Term.

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2.1.2   Development and Commercial License for Program 1, Program 3 and Program 5

Subject to Roche exercising its Option Right with regard to a Collaboration Target for Program 1, Program 3 or Program 5 (as applicable) as set forth in Section 3.1, BPM hereby grants to Roche, effective upon the Option Exercise Date for such Collaboration Target, a non-transferable (except as provided in Section 23.4), sublicensable (subject to Section 2.3.1), exclusive (even as to BPM but subject to BPM’s retained rights, as applicable) license under BPM IP and Collaboration Compound IP to Exploit Licensed Products and Companion Diagnostics for Program 1, Program 3 or Program 5 (as applicable) in the Field in the Roche Territory.

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With respect to the Excluded Field, under this Agreement, Roche shall not (and shall require its Affiliates and Sublicensees to not) research, develop, manufacture or commercialize any Library Compound, Collaboration Compound, Other Compound, Product or Licensed Product for Program 1, Program 3 or Program 5 (as applicable) in the Excluded Field.  For clarity, the foregoing restriction does not apply to any of Roche’s or its Affiliate’s or Sublicensee’s research, development, manufacture or commercialization programs or activities outside of this Agreement.

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Notwithstanding any other provision of this Agreement, for the purposes of the license grants under this Section 2.1.2 with respect to any Licensed Product that is a Combination Product, (i) such license will only include a license with respect to the Collaboration Compound in such Combination Product, and (ii) in no event is a license granted hereunder with respect to any Other Component of a Combination Product.

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2.1.3   Development and Commercial Licenses for Program 2 and Program 4

Subject to Roche exercising its Option Right with regard to a Collaboration Target for Program 2 or Program 4 (as applicable) as set forth in Section 3.1, BPM hereby grants to Roche, effective upon the Option Exercise Date for such Collaboration Target, a non-transferable (except as provided in Section 23.4), sublicensable (subject to Section 2.3.2), exclusive (even as to BPM but subject to BPM’s retained rights, as applicable) license under BPM IP and Collaboration Compound IP to Exploit Licensed Products and Companion Diagnostics for Program 2 or Program 4 (as applicable) in the Field in the Roche Territory.

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Notwithstanding the foregoing, for Program 2 or Program 4, BPM retains the right under the BPM IP and Collaboration Compound IP, with the right to grant licenses through multiple tiers, to

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develop each Product or Licensed Product (as applicable) in the Field anywhere in the world, in each case solely as and to the extent permitted in any Phase I Plan or Development Plan or as otherwise permitted under Section 7.2 or elsewhere under this Agreement, and in each case, solely for Regulatory Approval and commercialization in the BPM Territory.

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With respect to the Excluded Field, under this Agreement, Roche shall not (and shall require its Affiliates and Sublicensees to not) research, develop, manufacture or commercialize any Library Compound, Collaboration Compound, Other Compound, Product or Licensed Product for Program 2 or Program 4 in the Excluded Field.  For clarity, the foregoing restriction does not apply to any of Roche’s or its Affiliate’s or Sublicensee’s research, development, manufacture or commercialization programs or activities outside of this Agreement.

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Notwithstanding any other provision of this Agreement, for the purposes of the license grants under this Section 2.1.3 with respect to any Licensed Product that is a Combination Product, (i) such license will only include a license with respect to the Collaboration Compound in such Combination Product, and (ii) in no event is a license granted hereunder with respect to any Other Component of a Combination Product.

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Subject to Roche exercising its Option Right with regard to a Collaboration Target for Program 2 or Program 4 (as applicable), Roche hereby grants to BPM, effective upon the Option Exercise Date for such Collaboration Target, a non-transferable (except as provided in Section 23.4), sublicensable (subject to Section 2.2 and Section 2.3.2), exclusive (even as to Roche but subject to Roche’s retained rights, as applicable) license, under Roche Know-How and Roche Patent Rights to Exploit Licensed Products and Companion Diagnostics for Program 2 or Program 4 (as applicable) in the Field in the BPM Territory.

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2.1.4   Manufacturing Licenses

Subject to the terms and conditions of this Agreement, BPM hereby grants to Roche a non-transferable (except as provided in Section 23.4), sublicensable (subject to Section 2.3.1), worldwide, non-exclusive license under BPM IP and Collaboration Compound IP for Roche to manufacture and have manufactured Collaboration Compounds, Products and Licensed Products solely to perform its activities under Section 9.1.

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Subject to the terms and conditions of this Agreement, Roche hereby grants to BPM a non-transferable (except as provided in Section 23.4), sublicensable (subject to Sections 9.3 and 9.4), worldwide, non-exclusive license under Roche Patent Rights, Roche Know-How and […***…] for BPM to manufacture and have manufactured Collaboration Compounds, Products and Licensed Products solely to perform its activities under Section 9.1.

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Subject to the terms and conditions of this Agreement, Roche hereby grants to BPM a non-transferable (except as provided in Section 23.4), sublicensable (subject to Sections 9.3 and 9.4), worldwide, non-exclusive license under […***…] for BPM to manufacture and have manufactured Other Compounds and any derivatives thereof.  

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2.1.5   Licenses to Conduct Supplemental Studies

Subject to the terms and conditions of this Agreement, BPM hereby grants to Roche a non-transferable (except as provided in Section 23.4), sublicensable (subject to Section 2.3.1),

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worldwide, non-exclusive license under BPM IP and Collaboration Compound IP for Roche to conduct Supplemental Studies in compliance with Section 7.3.2.

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Subject to the terms and conditions of this Agreement, Roche hereby grants to BPM a non-transferable (except as provided in Section 23.4), sublicensable (subject to Section 2.3.2), worldwide, non-exclusive license under Roche Patent Rights and Roche Know-How for BPM to conduct Supplemental Studies in compliance with Section 7.3.2.

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2.1.6   Rights of Reference

Each Party hereby grants to the other Party, and at the request of the other Party will grant to the other Party’s Affiliates, a “Right of Reference”, as that term is defined in 21 C.F.R. § 314.3(b) (or any successor rule or analogous law recognized outside of the United States), to, and a right to copy, access, and otherwise use, all information and data (including all CMC information as well as data made, collected or otherwise generated in the conduct of any Clinical Studies or upon exercise of the Supplemental Study Opt-In Right, Supplemental Studies, or early access/named patient programs for the applicable Products or Licensed Products) included in or used in support of any regulatory filing, Regulatory Approval, drug master file or other regulatory documentation (including orphan drug applications and designations) maintained on behalf of such Party (or its Affiliates) that relates to any Product or Licensed Product, to the extent necessary or useful to obtain Regulatory Approval of a Product or Licensed Product in the BPM Territory or the Roche Territory, as applicable, and such Party will provide a signed statement to this effect, if requested by the other Party, in accordance with 21 C.F.R. § 314.50(g)(3) (or any successor or analogous law outside of the United States).  In addition, upon reasonable request of either Party (on behalf of itself or a Sublicensee), the other Party will obtain and provide to the requesting Party certificates or other formal or official attestations concerning the regulatory status of the Products or Licensed Products in the BPM Territory or the Roche Territory, as applicable (e.g., Certificates of Free Sale, Certificates for Export, Certificates to Foreign Governments), at the requesting Party’s request, and provided further that such attestations are reasonably necessary for the requesting Party to exercise its rights under this Agreement.  Notwithstanding anything to the contrary in this Agreement other than for safety concerns, neither Party will withdraw or inactivate any regulatory filing that the other Party references or otherwise uses pursuant to this Section 2.1.6.

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2.2     Right of First Negotiation and […***…]

During the Agreement Term, if BPM elects to sublicense or divest to a Third Party part or all of its development or commercialization rights in the BPM Territory pursuant to Program 2 and/or Program 4, then BPM shall promptly notify Roche of its decision to do so and Roche shall have a right of first negotiation to enter into an exclusive negotiation period with BPM in order to reach agreed terms for such a sublicense or divestment.  Roche shall inform BPM within […***…] after receipt of notification from BPM (“Exclusive Terms Period”) as to whether Roche is interested in entering into an exclusive negotiation period. If Roche provides written notice to BPM during the Exclusive Terms Period, then the Parties shall negotiate a term sheet within an additional […***…] period. If the Parties are able to agree upon a term sheet within the […***…] period, then the Parties shall negotiate a definitive agreement within an additional […***…] negotiation period.  

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If the Parties are unable to reach terms on a term sheet in such […***…] period or on a definitive agreement in the additional […***…] negotiation period, then, at BPM’s written election, BPM shall have the right to either (a) negotiate and, subject to […***…], enter into a sublicense or divestment agreement with a Third Party in accordance with Section 2.3.2, or (b) commence Expedited

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Arbitration proceedings by providing written notice to Roche to resolve any disputed terms in such term sheet or definitive agreement.  […***…]  If Roche provides written notice to discontinue such Expedited Arbitration proceedings within such […***…] period, then […***…] shall terminate and BPM shall have the right to negotiate and enter into a sublicense or divestment agreement with a Third Party in accordance with Section 2.3.2.  […***…]      

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If BPM negotiates a sublicense or divestment agreement with a Third Party after either (1) the Parties are unable to reach terms of a term sheet within the […***…] period or terms of a definitive agreement within the additional […***…] negotiation period and either (x) BPM does not exercise its right to commence Expedited Arbitration proceedings or (y) BPM provides written notice to discontinue such Expedited Arbitration proceedings, or (2) Roche does not exercise such right of first negotiation during the Exclusive Terms Period, then […***…].  

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In all events, this Section 2.1.5 will not apply to (A) any Change of Control of BPM or other permitted assignment of this Agreement under Section 23.4, (B) any bona fide agreement with a CRO, under which such CRO performs contract services on behalf of BPM or any of its Affiliates for the research, development, manufacture or commercialization of any Collaboration Compound, Other Compound, Product or Licensed Product as permitted under this Agreement on a fee-for-services basis, it being understood that under an agreement for such fee-for-services, fees paid to the Third Party for such services may include milestones or royalties, (C) any agreement permitted in compliance with the terms of this Agreement with any academic institution or other not-for-profit Third Party regarding any Collaboration Compound, Other Compound, Product or Licensed Product, or (D) any agreement with a distributor regarding any Licensed Product for Program 2 and Program 4 in the BPM Territory.

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If Roche does not exercise such right of first negotiation during the Exclusive Terms Period, then BPM shall have the right to negotiate and, subject to […***…] enter into a sublicense or divestment agreement with a Third Party in accordance with Section 2.3.2.

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2.3     Sublicenses

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2.3.1   Roche’s Scope of Permissible Sublicensing

The license granted by BPM to Roche in Section 2.1.2 and Section 2.1.3 may be sublicensed by Roche through multiple tiers, provided that (i) Roche will ensure that the financial terms included in Section 12 that are applicable to the scope of the sublicense granted remain unchanged, (ii) BPM’s obligations to such sublicensed Affiliate or Sublicensee will be no broader than BPM’s obligations were to Roche under this Agreement prior to Roche’s grant of such a sublicense, (iii) Roche will be liable for any act or omission of any such sublicensed Affiliate or Sublicensee that is a breach of any of Roche’s obligations under this Agreement as though the same were a breach by Roche, and BPM will have the right to proceed directly against Roche without any obligation to first proceed against such sublicensed Affiliate or Sublicensee, (iv) Roche will ensure that Roche receives from the Sublicensee all rights necessary for Roche to grant to BPM the rights and licenses upon termination of the Agreement set forth in Section 21.3 and (v) such sublicensed Affiliate or Sublicensee will undertake obligations of confidentiality and non-use regarding Confidential Information that are at least as protective as those undertaken by Roche with respect to Confidential Information pursuant to Section 20 hereof.  Roche, as soon as reasonably practicable thereafter, shall provide BPM with a copy of any executed sublicense agreement with a Third Party other than […***…], or a Third Party acting only as a distributor (which copy may be redacted to remove provisions which are not necessary to monitor compliance with this Section 2.3.1).

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The license granted by BPM to Roche in Section 2.1.1 may be sublicensed by Roche to a permitted CRO to perform Roche’s assigned responsibilities under the Research Plans and Phase I Plans upon prompt written notice to BPM.

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The license granted by BPM to Roche in Section 2.3.1 may be sublicensed by Roche to a permitted CRO to perform Roche’s assigned responsibilities under Section 9.1.

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2.3.2   BPM’s Scope of Permissible Sublicensing

The license granted by Roche to BPM in Section 2.1.3 may be sublicensed by BPM through multiple tiers, provided that (i) BPM will ensure that the financial terms included in Section 12 that are applicable to the scope of the sublicense granted remain unchanged, (ii) Roche’s obligations to such sublicensed Affiliate or Sublicensee will be no broader than Roche’s obligations were to BPM under this Agreement prior to BPM’s grant of such a sublicense, and (iii) BPM will be liable for any act or omission of any such sublicensed Affiliate or Sublicensee that is a breach of any of BPM’s obligations under this Agreement as though the same were a breach by BPM, and Roche will have the right to proceed directly against BPM without any obligation to first proceed against such sublicensed Affiliate or Sublicensee, (iv) BPM will ensure that BPM receives from the Sublicensee all rights necessary for BPM to grant to Roche the rights and licenses upon termination of the Agreement set forth in Section 21.3 and (v) such sublicensed Affiliate or Sublicensee will undertake in writing obligations of confidentiality and non-use regarding Confidential Information that are at least as protective as those undertaken by BPM with respect to Confidential Information pursuant to Section 20 hereof.

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The license granted by Roche to BPM in Section 2.1.1 may be sublicensed by BPM to a permitted CRO to perform BPM’s assigned responsibilities under the Research Plans and Phase I Plans upon written notice to Roche.

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2.4    BPM Third Party Payments

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BPM will be responsible for all payments associated with any agreements related to the BPM IP that exist as of the Effective Date, except as otherwise agreed to in writing.  For clarity, to the extent payments under those agreements are incurred by BPM pursuant to the Research Plan or Phase I Plan, such payments will not be reimbursed by Roche unless they are specifically included under the Research Plan budget or Phase I Plan budget as an amount to be reimbursed by Roche.

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In the event that, after the Effective Date and prior to any Change of Control of BPM, BPM in-licenses BPM IP that would be deemed Controlled for purposes of the licenses granted to Roche under Section 2.1 but for BPM owing payments under the agreement for such in-licensed BPM IP on account of any sublicense granted thereunder to Roche or its Affiliates or Sublicensees, BPM will notify Roche of the existence of and anticipated amounts of such payments and Roche will have the right to decline a sublicense to such in-licensed BPM IP or take such sublicense, in which case Roche agrees to comply with any obligations under such agreement of BPM that apply to Roche and of which Roche was informed by BPM, including any obligation to make such payments.  In the event Roche elects to take such sublicense, Roche will make such payments to BPM within thirty (30) days of receiving an invoice from BPM for the same.

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2.5     Exclusivity

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2.5.1   BPM Exclusivity with regard to Collaboration Targets

On a Collaboration Target-by-Collaboration Target basis, BPM and its Affiliates shall work exclusively with Roche during the Option Period with respect to such Collaboration Target. BPM and its Affiliates shall continue to work exclusively with Roche on each Collaboration Target for which Roche exercises its Option Right until the earliest of (i) (a) for Program 1, Program 3 and Program 5, the First Commercial Sale by the Roche Group in the Roche Territory of the first Licensed Product with respect to such Collaboration Target, or (b) for Program 2 and Program 4, the First Commercial Sale by the Roche Group or the BPM Group in the Territory of the first Licensed Product with respect to such Collaboration Target, (ii) such Collaboration Target becomes a Leftover Target, or (iii) such Collaboration Target becomes a Terminated Target.

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2.5.2   BPM Exclusivity with regard to Cancer Immunotherapy

BPM and its Affiliates shall work exclusively with Roche in the field of cancer immunotherapy until Target Validation for Part 2 is completed and the Pool is established by the JRC, but in any event for no more than thirty (30) months after the Effective Date. […***…]  Excluded Targets and Leftover Targets (and research and development activities with respect thereto), and customary screening and early-stage chemistry and biology work performed by and on behalf of BPM in the ordinary course, shall not be subject to or otherwise prohibited by this Section 2.5.2.  The conduct of general screening activities by or on behalf of BPM or its Affiliates shall not be deemed a breach of this Section 2.5.2 unless and until BPM or its Affiliates decides to pursue a Target for additional development.

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2.5.3   BPM Rights if Roche is not Exclusive for a Collaboration Target

If Roche or its Affiliates gain access (such as through licensing or acquisition from a Third Party) to a compound or product targeting a Collaboration Target prior to exercising its Option Right for such Collaboration Target, then Roche shall immediately notify BPM in writing and BPM shall have the right upon written notice to Roche to terminate (i) Roche’s Option Right to such Collaboration Target and (ii) all activities under the Research Plan and Phase I Plan for such Collaboration Target.  If BPM opts for such termination, then such Collaboration Target will become a Leftover Target and all associated Collaboration Compounds and Products will become Reversion Products.  […***…]

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If Roche or its Affiliates gain access (e.g., via licensing or acquisition or internal program, or any other way) to a compound or product targeting a Collaboration Target after exercising its Option Right for such Collaboration Target, then without affecting the rights and obligations of the parties under this Agreement, for clarity, BPM shall have no right of termination as set forth above and Roche shall continue to use Commercially Reasonable Efforts to develop and commercialize Licensed Products corresponding to such Collaboration Target.  

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In the case of Program 2 or Program 4, if Roche or its Affiliates gain access (e.g., via licensing or acquisition or internal program, or any other way) to a compound or product targeting a Collaboration Target of such Program 2 or Program 4 and exercises its Option Right for such Collaboration Target (before or after gaining such access), and such compound or product has initiated (i.e., the date that a human is first dosed with the compound or product in a human clinical study) (i) a Phase II Study in the case of a compound or product accessed from a Third Party or internally (other than from […***…]) or (ii) a Phase III Study in the case of a compound or product

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accessed from […***…], then BPM’s obligation of exclusivity under Section 2.5.1 with respect to such Collaboration Target shall automatically and immediately terminate. Roche shall as soon as practicable notify BPM in writing upon any such initiation of such Phase II Study or Phase III Study (as applicable).

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2.5.4   Limitations on BPM Exclusivity Obligations

The Parties hereby acknowledge and agree that (I) after expiration of the obligations set forth in Section 2.5.2, Sections 2.5.1 and 2.5.2 will not apply to any compound or product that is intended to modulate (including inhibit) any target(s) other than a Collaboration Target; and (II) BPM retains (for itself and its Affiliates and licensees and subcontractors) (A) the right to research (but not preclinically or clinically develop or commercialize) Collaboration Compounds, Products and Licensed Products outside of the applicable Research Plans, (B) the right, solely to the extent reasonably necessary for any such research, to manufacture Collaboration Compounds, Products and Licensed Products outside of the applicable Research Plans, and (C) the rights under the license grants in Section 2.1 or elsewhere in this Agreement or elsewhere retained under this Agreement.

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Notwithstanding Section 2.5.1 and Section 2.5.2, and subject to the next paragraph, in the event that BPM or its Affiliates acquire a Third Party or a portion of the business of a Third Party (whether by merger, stock purchase, purchase of assets, in-license or other means) (a “Third Party Acquisition”) that is, prior to such Third Party Acquisition, conducting a research, development or commercialization program or activities that, if conducted by BPM at such time, would be a breach of BPM’s exclusivity obligation in Section 2.5.1 or Section 2.5.2 (a “BPM Other Program”), BPM may elect […***…].  BPM will not be deemed in breach of Section 2.5.1 and Section 2.5.2 with respect to such BPM Other Program so long as BPM complies with the terms of Section 2.5.1 and Section 2.5.2 and provided that such BPM Other Program is conducted independently of BPM’s activities under this Agreement and without any use of any Roche Know-How, Roche Patent Rights or Roche Confidential Information or material use (other than the retained rights above) of the Collaboration Compounds.

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In the event of a Change of Control of BPM, the exclusivity obligations of BPM set forth in Section 2.5.1 and Section 2.5.2 will not apply to any research, development or commercialization program or activities that, if conducted by BPM at such time would be a breach of BPM’s exclusivity obligations in Section 2.5.1 or Section 2.5.2, (I) is owned, in-licensed or otherwise controlled by a Third Party described in the definition of “Change of Control” or its Affiliates prior to the closing of such Change of Control or (II) becomes owned, in-licensed or otherwise controlled by such Third Party or its Affiliates (other than by BPM or any of its direct or indirect subsidiary Affiliates) after the closing of such Change of Control, in each case ((I) and (II)) if such BPM Other Program is conducted independently of BPM’s activities under this Agreement and without any use of any Roche Know-How, Roche Patent Rights or Roche Confidential Information or material use (other than the retained rights above) of the Collaboration Compounds.  

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With respect to the two preceding paragraphs of this Section 2.5.4, BPM and its Affiliates (including such Third Party and its Affiliates under the preceding paragraph) will adopt reasonable procedures (which include appropriate administrative, physical and technical safeguards, including underlying operating system and network security controls and other firewalls) to prevent the use of any Roche Know-How, Roche Patent Rights or Roche Confidential Information or material use (other than the retained rights above) of the Collaboration Compounds in a manner that is not in compliance with the two preceding paragraphs of this Section 2.5.4.

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3.     Option of Roche

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3.1     Option Right

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3.1.1   General

On a Collaboration Target-by-Collaboration Target basis, Roche is granted up to five (5) exclusive Option Rights to obtain an exclusive or co-exclusive license to Exploit Products containing a Collaboration Compound directed to the Collaboration Target to which the Option Right pertains in the Field in the Territory.  Once the Option Right for a Collaboration Target is exercised, such Products become “Licensed Products” and the program for the development and commercialization of such Licensed Products becomes a “Program.”  The designation of a Program as Program 1, Program 2, Program 3, Program 4 or Program 5 will occur as specified in the definition of Program.

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3.1.2   Grant of Option Right

On a Collaboration Target-by-Collaboration Target basis, BPM hereby grants to Roche during the Option Period an exclusive Option Right for each Collaboration Target to obtain the licenses set forth in Section 2.1.2, Section 2.1.3 and Section 2.1.4 with respect to such Collaboration Target, Licensed Products and Program.  

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3.1.3   Exercise of Option Right

In the event the Option Data Package Trigger is determined pursuant to Section 1.83(a),for each Collaboration Target, within […***…] after the Option Data Package Trigger, (i) each Party will deliver its portion of the Option Data Package with respect to such Collaboration Target, and (ii) BPM will afford Roche the information rights under Section 3.2.  In the event that Roche determines that BPM’s Portion of an Option Data Package for a Collaboration Target is incomplete or insufficient, then Roche shall provide written notice to BPM identifying all such deficiencies.  If BPM disputes the existence of any such deficiencies, BPM may, at its election, refer such dispute for resolution in accordance with Section 8.8.3.  If BPM’s Portion of such Option Data Package for a Collaboration Target is determined to be incomplete or insufficient, BPM shall promptly upon curing all deficiencies re-deliver an updated version of BPM’s Portion of such Option Data Package for such Collaboration Target to Roche; provided that Roche may not request a further updated version of BPM’s Portion of such Option Data Package for such Collaboration Target for a period of […***…].  

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On a Collaboration Target-by-Collaboration Target basis, Roche shall have the right to exercise its Option Right during the Option Period for a given Collaboration Target.  Roche will exercise an Option Right for a Collaboration Target, if at all, by properly delivering an Option Exercise Notice for such Collaboration Target at any time during the Option Period for such Collaboration Target.

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In the event the Option Data Package Trigger is not determined pursuant to Section 1.83(a), the JDC will set a cut-off date for the data resulting from the Phase I Studies conducted by the Parties for each Collaboration Target so that such data may be included in an Option Data Package for such Collaboration Target in a timely fashion. Such cut-off date shall be determined as follows:  

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(a)  […***…]

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(b)  […***…]  

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In the event that (a) a Product is for a […***…], (b) such Product satisfies all Option Data Criteria other than the […***…], and (c) Roche wishes to extend the Option Period for such Collaboration Target until all of the Option Data Criteria are satisfied (but in any event no longer than the […***…] anniversary of the date the MTD for the first Combination Product for such […***…] is confirmed by the JDC plus […***…]), then Roche shall provide written notice to BPM of Roche’s election to extend the Option Period and pay to BPM an Option Period extension fee equal to (v) […***…] for the first Collaboration Target for which Roche exercises its extension right under this Section 3.1.3, (w) […***…] for the second Collaboration Target for which Roche exercises its extension right under this Section 3.1.3, (x) […***…] for the third Collaboration Target for which Roche exercises its extension right under this Section 3.1.3, (y) […***…] for the fourth Collaboration Target for which Roche exercises its extension right under this Section 3.1.3, and (z) […***…] for the fifth Collaboration Target for which Roche exercises its extension right under this Section 3.1.3.  Such Option Period extension fee shall be due and payable by Roche to BPM within thirty (30) days after the determination that such Product satisfies all Option Data Criteria other than the […***…].  The Parties agree that […***…] of any such Option Period extension fee payment […***…] in accordance with Section 12.4, provided that (i) each Option Period extension fee payment […***…] only if Roche exercises its Option Right for such Collaboration Target, and (ii) any amounts that are […***…] in accordance with Section 12.4 (but may not be applied to any other payments under this Agreement).  […***…] for each Collaboration Target […***…] will be due and payable after Roche’s exercise of its Option Right for such Collaboration Target in accordance with Section 12.4.  In the event that (a) a Product is for a […***…], (b) such Product satisfies all Option Data Criteria other than the […***…], and (c) Roche does not pay the Option Period extension fee as set forth above, then such […***…] shall be a Terminated Target.

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For any Collaboration Target to which Roche does not timely exercise its Option Right, then, effective as of the expiration of the Option Period for such Collaboration Target, (a) all research and development activities with respect to such Collaboration Target shall terminate, (b) such Collaboration Target shall become a Leftover Target, (c) BPM shall retain all rights, title and interest in and to all Library Compounds, Other Compounds, Collaboration Compounds and Products for such Collaboration Target, (d) all rights and obligations (including the licenses to Roche) under this Agreement with respect to such Collaboration Target shall terminate, (e) the right of first negotiation and matching right under Section 2.2 with respect to such Collaboration Target shall terminate, and (f) the exclusivity provisions under Section 2.5 shall terminate.  For clarity, if Roche does not timely exercise its Option Right related to a given Collaboration Target, and BPM desires to continue to research, develop or commercialize such Collaboration Compound or Product in combination with a Roche Clinical Compound or Roche Marketed Products, then Roche will consider, at its sole discretion, supplying such Roche Clinical Compound or Roche Marketed Products to BPM or its designee pursuant to a supply agreement on terms and conditions to be agreed upon by the Parties in good faith.

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3.1.4   One Time Program Switch Right

After Roche’s receipt of the first Option Data Package for a Collaboration Target or at the end of the Option Period for the first Collaboration Target, Roche shall have a one-time right to exercise its Option Right for such Collaboration Target by declaring such Collaboration Target as “Program 2”, thereby declaring the next most advanced Collaboration Target as designated by the JRC or JDC (as applicable) as “Program 1” (the “Switch”).  If Roche elects to make the Switch, then Roche shall provide written notice to BPM prior to expiration of the Option Period for the first Collaboration Target of Roche’s election to make the Switch and identify the Collaboration Target

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that will be “Program 2” and the Collaboration Target that will be “Program 1”.  If Roche makes the Switch, then Roche shall pay both the Program 1 Option Exercise Fee and the Program 2 Option Exercise Fee as set forth in Section 12.4, subject to the limitations in the following paragraph.

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In the event that Products for Program 1 and Program 2 are each being developed or planned to be developed in Phase I Studies as Products for a […***…] pursuant to Section 5.1.3, then, simultaneously with the Switch, Roche shall exercise its Option Right with respect to the next most advanced Collaboration Target as designated by the JRC or JDC (as applicable) making it “Program 1”.  The Program 1 Option Exercise Fee shall be payable as set forth in Section 12.4, i.e. […***…] within […***…] after Roche exercises its Option Right and receipt of an invoice from BPM.  If such next most advanced Collaboration Target has reached MTD more than […***…] prior to the Switch election, then the Program 2 Option Exercise Fee (i.e., […***…]) shall be payable at the same time as the Program 1 Option Exercise Fee.  If such next most advanced Collaboration Target has either not yet reached MTD or not reached MTD within […***…] preceding the Switch, then the Program 2 Option Exercise Fee (i.e., […***…]) shall be payable only (i) after BPM has provided Roche with the Option Data Package for the Collaboration Target declared as Program 1 as per the Switch, and Roche has determined, within […***…] after Roche receives the Option Data Package, to not exercise its termination right with respect to the Collaboration Target declared as Program 1 as per the Switch, or (ii) upon Roche Initiating a Clinical Study of a Product or Licensed Product against the Collaboration Target declared as Program 1 as per the Switch. For clarity, if either Program 1 or Program 2 or both are being developed as a […***…] and Roche elects to make the Switch, payments of the Option Exercise Fee for each such Program shall be in accordance with Section 3.1.3 and Section 12.4.

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3.2     Information Sharing for Option Rights

After the Option Data Package Trigger for each Collaboration Target and for the remainder of the Option Period with respect to such Collaboration Target, (i) Roche shall have the right to perform reasonable due diligence (including visits to the facilities in which the data were generated and interviews with the persons generating the data) with respect to such Collaboration Target and the applicable Collaboration Compounds and Products, and (ii) representatives of Roche shall have the opportunity to ask questions of and receive answers from representatives of BPM related to the work that has been conducted and the data that have been generated with respect to such Collaboration Target and the applicable Collaboration Compounds and Products. BPM shall respond to Roche’s inquiries in a timely fashion and without delay and shall not withhold any material information regarding such Collaboration Target and the applicable Collaboration Compounds and Products from Roche in response to Roche’s inquiries.  For clarity, the disclosure and use of any structures or structural information of the Collaboration Compounds and Products pursuant to this Section 3.2 will be subject to the terms of Section 4.1.4, mutatis mutandis.  

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4.     Research Collaboration

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4.1     Conduct of the Research

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4.1.1   Scope

On a Collaboration Target-by-Collaboration Target basis, BPM shall have lead responsibility for the conduct of all research of Library Compounds, Other Compounds and Collaboration Compounds in the Field in the Territory.  The activities conducted under each Research Plan will be overseen by the JRC.  For clarity, prior to exercise of its Option Right for a Collaboration Target,

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Roche and its Affiliates shall not conduct any research activities under this Agreement with respect to such Collaboration Target except as expressly permitted in the Research Plans.  It is understood and agreed that (a) Roche shall not, under this Agreement, research, develop, manufacture or commercialize any Library Compounds, Other Compounds or Collaboration Compounds (and corresponding Products) unless such activities are included in a Research Plan or Phase I Plan, and (b) on a Collaboration Target-by-Collaboration Target basis, upon the start of the first GLP Tox Study of a Collaboration Compound satisfying the CCS Criteria for such Collaboration Target (e.g., the most advanced such Collaboration Compound for such Collaboration Target), BPM shall not be required under this Agreement to conceive or make any new compounds as potential Collaboration Compounds for such Collaboration Target.

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4.1.2   Diligent Efforts

On a Collaboration Target-by-Collaboration Target basis, Roche and BPM shall each use Commercially Reasonable Efforts to perform their respective tasks and obligations in conducting all activities ascribed to it in the then-current Research Plan for such Collaboration Target in the Field, in accordance with the time parameters set forth therein.

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4.1.3   Research Plans

Unless decided otherwise by the JRC, the Research Plans will be updated at least annually by the JRC and approved by the JRC. The Research Plans will set forth (i) the scope of the research and the resources that will be dedicated to the activities contemplated, including the responsibilities of each Party, (ii) specific objectives for each year, which objectives will be updated or amended, as appropriate, by the JRC as research progresses, and (iii) key deliverables for each Party. The Parties shall prepare a Research Plan for (a) the first three (3) Collaboration Targets (each of […***…], […***…] and […***…]), within thirty (30) days after the Effective Date, and (b) for each additional Collaboration Target, within thirty (30) days after the designation of such Target as a Collaboration Target, which the JRC shall minute.  The JRC shall review the Research Plans on an ongoing basis and may amend the Research Plans.  Any such changes shall be reflected in written amendments to the Research Plans.

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4.1.4   Backup Compounds

The JRC and JDC shall ensure that the Research Plan and Phase I Plan for each Collaboration Target contains a plan for the research and development of Backup Compounds.  […***…].  Progress of up to […***…] Collaboration Compounds satisfying CCS Criteria through GLP Tox Studies for a Collaboration Target shall be at BPM’s sole expense.  Additional Backup Compounds may be progressed through a GLP Tox Study at Roche’s sole discretion and expense (including any supply thereof) as part of the Research Plan and under the supervision of the JRC, provided that BPM will have the right to conduct (or have conducted) any such GLP Tox Study, and if BPM elects such right then Roche shall reimburse BPM for any personnel costs, Allocable Overhead or Out of Pocket Expenses incurred by BPM with respect thereto.  All Phase I Development Costs for the first Backup Compound for a Collaboration Target in a Phase I Study shall be shared as set forth in Section 12.5 (including subject to the cap stated therein); provided that BPM shall only be obligated to fund one (1) Collaboration Compound for a Collaboration Target at a time in a Phase I Study.  Thereafter, all Phase I Development Costs for any Backup Compound for a Collaboration Target in a Phase I Study shall be at Roche’s sole expense and discretion (including any supply thereof) as part of the Phase I Plan and under the supervision of the JDC, provided that BPM will have the right to conduct (or have conducted) any such Phase I

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Study, and if BPM elects such right then Roche shall reimburse BPM for any Phase I Development Costs incurred by BPM with respect thereto.  

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4.1.5   Part 1 Activities

In Part 1, the Parties will work on the three (3) specified Collaboration Targets: […***…], […***…] and […***…]. Prior to the JRC determining that […***…] has satisfied […***…], the Parties may upon mutual written agreement replace […***…] with another Collaboration Target. The Parties will select an additional two (2) Collaboration Targets in Part 2, as described in Section 4.1.6.

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For each Collaboration Target, BPM will select Library Compounds of different scaffolds offering different starting chemistry points, and exhibiting adequate kinase potency, activity in binding, enzyme and/or biochemical and cell-based assays, kinase selectivity, and ADME characteristics.

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Such Library Compounds shall be derivatized by BPM to improve potency, selectivity and ADME profile characteristics (via application of applicable kinase binding assays, cellular target engagement measurements, and in vitro ADME profiling), and thereby establish structure-activity relationships of different compound series, including Other Compounds and Collaboration Compounds. […***…].

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Further optimization of potency, selectivity and ADME profile characteristics of Library Compounds, Collaboration Compounds and Other Compounds by BPM during Lead Optimization shall enable in vivo Animal POC experiments of selected Collaboration Compounds by Roche or a CRO (provided that Roche shall continue to bear responsibility for the conduct of such experiments). Additional ADME/PK/safety/stability testing and pre-formulation activities performed by BPM during Lead Optimization shall help identify Collaboration Compounds meeting CLS Criteria and finally CCS Criteria. The JRC shall discuss the use of CROs for such activities. Any CRO recommended by the JRC shall either be listed in Appendix 1.38 or otherwise approved by Roche (such approval not be unreasonably withheld, conditioned or delayed). […***…]. At Lead Nomination and/or during Lead Optimization, as per Section 8.4, the JRC will also recommend whether Roche’s chemistry resources should be included in Lead Optimization to address issues including BPM resource constraints or to assist with problem-solving. In summary, the work during Lead Optimization is being performed by BPM, with Roche providing protein crystallography and modeling support and input to the preclinical evaluation, and the JRC recommending further Roche contributions including chemistry resources.  For clarity, except as provided for in Section 21.2.3, the Roche Group is granted no right under this Agreement to perform any medicinal chemistry activities with respect to Library Compounds, Other Compounds, Collaboration Compounds, Products or Licensed Products under this Agreement unless authorized by the JRC or by the mutual agreements of the Parties.

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A chemistry expert at Roche (“Insulated Chemistry Expert”) shall be designated in writing by Roche to review structures of Other Compounds and Collaboration Compounds at the start of the collaboration and throughout the Lead Nomination phase. The Insulated Chemistry Expert shall independently handle the structural information and no structures provided by BPM to the Insulated Chemistry Expert can be shared with any other individuals within Roche other than members of senior management specified on Appendix 4.1.5 acting in their decision making capacity. For clarity, these structures cannot be used for any other purpose, including any research purpose.  Appropriate safeguards will be established by Roche that are intended to prevent any inadvertent disclosure or improper use of these structures and any structural information related to such structures. From Lead Nomination onwards and throughout Lead Optimization, the structures of Other Compounds and Collaboration Compounds in the Lead

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Optimization phase shall be shared with the Roche project team members (including Collaboration Compounds meeting Lead Series Identified Criteria, CLS Criteria and CCS Criteria).

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In order to enable manufacture of batches of selected Collaboration Compounds for GLP Tox Studies, BPM or Roche (as determined by the JRC) shall initiate activities for manufacturing process optimization (including establishment of an entry into GLP Tox manufacturing process), entry into GLP Tox formulations, GLP analytics including establishment of specifications for drug substance and drug product at the appropriate time point after CLS, with specifications aligned by the JRC in accordance with Section 8.4. […***…] At the meeting of CCS Criteria, an entry-into-human formulation strategy shall also be available and aligned by the JRC.

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Subject to Section 4.1.4, GLP Tox Studies, after confirmation of Collaboration Compound exposure with the GLP Tox batch, shall be performed by BPM in both rodent and non-rodent species […***…], at BPM’s expense, as a final step of the preclinical phase at a CRO approved by Roche (such approval not to be unreasonably withheld, conditioned or delayed) unless the CRO is already listed in Appendix 1.38.

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4.1.6     Part 2 Activities

Part 2 shall start with Screening of Library Compounds selected by both Parties (e.g., the diversity set comprised in BPM Technology) in both assays performed by BPM (Jurkat-cell based) and by Roche ([…***…]), and the screening and validation phase of Part 2 shall end on the earlier of […***…]. It is anticipated that the Screening phase will last approximately […***…]. Screening Hits shall be selected by the JRC and taken forward into Target Validation, with the Target Validation plan approved by the JRC, including any Library Compound derivatization during the Target Validation phase to test Library Compounds, Other Compounds and Collaboration Compounds. It is anticipated that at least […***…] as a shared effort between BPM and Roche with studies being performed by both Parties. Target Validation aims to deliver a pool of validated Collaboration Targets as determined by the JRC (“Pool”). For Collaboration Targets selected in Part 2, a Research Plan will be established prior to initiating Lead Nomination Activities based on Library Compounds, Other Compounds or Collaboration Compounds identified during the respective Target Validation. The JRC shall select the Collaboration Targets from the Pool to be further pursued in Part 2 for Lead Nomination. If the JRC is unable to reach consensus on the selection of Collaboration Targets to pursue in Part 2, then Roche and BPM shall each select one (1) Collaboration Target for Part 2.  Activities from Lead Nomination onwards for such selected Part 2 Collaboration Targets shall follow the outline described under Part 1 activities. If Collaboration Compounds for a given Target from this Part 2 fail no later than in in vivo Animal POC experiments performed by or on behalf of Roche, and provided there are additional Collaboration Targets remaining in the Pool, then the JRC may replace a Collaboration Target with another Collaboration Target from the Pool. The JRC’s replacement right shall not exceed two (2) Collaboration Target replacements, and shall not extend beyond completion of Animal POC experiments for such Collaboration Targets. If the JRC is unable to reach consensus on a replacement for a Collaboration Target, then […***…].  After the JRC’s right to replace Collaboration Targets from the Pool has ended pursuant to this Section 4.1.6, all Collaboration Targets still then within the Pool shall automatically become Leftover Targets, and both Parties shall have rights to further research and develop compounds and products related to any Leftover Targets outside of the Agreement without any financial obligations owed to the other Party.  For clarity, (a) the JRC shall have the right to replace […***…] as set forth in Section 4.1.5, (b) the JRC shall have the right to replace the fourth or fifth Collaboration Targets no later than in in vivo Animal POC experiments for such Collaboration Target as set forth in this Section 4.1.6, and (c) the JRC shall have no right to replace […***…] or […***…].

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4.2   Records; Reports

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4.2.1   Progress Reports

At least quarterly during the Research and Development Term, (i) BPM shall prepare and provide to the JRC a detailed summary of the progress of the work performed by BPM under the Research Plans during the preceding Calendar Quarter and (ii) Roche shall update the JRC with a detailed summary of the progress of the work performed by Roche under the Research Plans during the preceding Calendar Quarter.  Promptly upon expiry of the Research and Development Term, each Party shall provide a final written report to the JRC summarizing its activities under the Research Plans and the results thereof.

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4.2.2   Research Records

Each Party shall maintain records of all research conducted under the Research Plans (or cause such records to be maintained) in sufficient detail and in good scientific manner as will properly reflect all work done and results achieved by or on behalf of such Party in the performance of activities under the Research Plans. All laboratory notebooks shall be maintained for no less than the term of any Patent Rights issuing therefrom.

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5.     Conduct of the Phase I Program

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5.1     Phase I Program

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5.1.1   Scope

On a Collaboration Target-by-Collaboration Target basis, BPM shall have the lead responsibility for the conduct of all Phase I Studies (even if Roche elects to exercise its Option Right before the completion of Phase I Studies), other than those Phase I Studies involving Roche Clinical Compounds or Roche Marketed Products, in accordance with the Phase I Plans.  Roche shall have the right to conduct all Phase I Studies involving Roche Clinical Compounds or Roche Marketed Products in accordance with the Phase I Plans. The activities conducted in connection with the Phase I Program will be overseen by the JDC.  For clarity, Roche and its Affiliates shall not conduct any Phase I Studies with respect to such Collaboration Target except as expressly permitted in the Phase I Plans.

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5.1.2   Diligent Efforts

For each Collaboration Target, Roche and BPM shall each use Commercially Reasonable Efforts to perform their respective tasks and obligations in conducting all activities ascribed to it in the then-current Phase I Plan for such Collaboration Target, in accordance with the time parameters set forth therein.

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5.1.3   Phase I Plan

The JDC shall strive by consensus to prepare a Phase I Plan for each Collaboration Target no later than thirty (30) days after the start of GLP Tox Studies for such Collaboration Target.  Each Collaboration Target will be designated by the JDC as either a […***…] or a […***…] in the applicable Phase I Plan.  […***…], the JDC shall amend the Phase I Plan for such Collaboration Target (if needed).  

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BPM shall prepare the initial draft of each Phase I Plan for any […***…], unless the combination is with a Roche Clinical Compound or Roche Marketed Product, in which case Roche shall prepare the initial draft of each such Phase I Plan.  The JDC shall review each Phase I Plan on an ongoing basis and may amend such Phase I Plan.  Any such changes shall be reflected in written amendments to such Phase I Plan. The Parties will conduct the Phase I Program in accordance with the Phase I Plans. Each Phase I Plan will set forth (i) the scope of the initial Phase I Studies for such Collaboration Target and the resources that will be dedicated to the activities contemplated within the scope of such Phase I Studies, including the responsibilities of each Party, (ii) projected patient enrollment rates consistent with Roche’s historic enrollment rates for similar drug candidates in Phase I Studies, (iii) specific objectives for Calendar Year end in which such initial Phase I Studies are conducted, which objectives will be updated or amended, as appropriate, by the JDC as development progresses, and (iv) a rolling two (2) year budget for such anticipated activities to be performed during the then-current Calendar Year and the next Calendar Year, and a forecast of the budgets for each subsequent Calendar Year thereafter through completion of all development activities set forth in such Phase I Plan; provided that BPM shall have no obligation to incur any Phase I Development Costs in excess of […***…] for all Phase I Studies for each Phase I Plan for each Collaboration Target as further described in Section 12.5. […***…].  

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5.1.4   Phase I Studies

BPM shall keep Roche informed and consult with Roche as needed through the JDC on the progress of Phase I Studies conducted by BPM.  

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5.1.5   Duration

On a Collaboration Target-by-Collaboration Target basis, the Phase I Program for a Collaboration Target shall commence on the start of the first Phase I Plan for such Collaboration Target and shall continue until the expiration of the Option Period for such Collaboration Target.   […***…].    

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5.2     Records; Reports

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5.2.1   Progress Reports

At least quarterly during the Phase I Program, (i) BPM shall prepare and provide to the JDC a detailed summary of the progress of the work performed by BPM under the Phase I Plans during the preceding Calendar Quarter and (ii) Roche shall prepare and provide to the JDC a detailed summary of the progress of the work performed by Roche under the Phase I Plans during the preceding Calendar Quarter. Promptly upon expiry of the Research and Development Term, each Party shall provide a final written report to the JDC summarizing its activities under the Phase I Plans and the results thereof.

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5.2.2   Phase I Records

Each Party shall maintain records of all Phase I Studies conducted under the Phase I Plans (or cause such records to be maintained) in sufficient detail and in good scientific manner as will properly reflect all work done and results achieved by or on behalf of such Party in the performance of activities under the Phase I Plans.  All laboratory notebooks shall be maintained for no less than the term of any Patent Rights issuing therefrom.

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6.     Diligence

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Each Party shall use Commercially Reasonable Efforts in the conduct of each Research Plan and Phase I Plan.  

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For any Collaboration Target for which Roche exercises its Option Right, Roche shall use Commercially Reasonable Efforts to further develop (pursuant to the agreed Development Plan) and commercialize at least one (1) Licensed Product in at least one (1) Indication in the Field in the Roche Territory.

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For Program 2 and Program 4, BPM shall use Commercially Reasonable Efforts to further develop (pursuant to the agreed Development Plan) and commercialize at least one (1) Licensed Product in at least one (1) Indication in the Field in the BPM Territory.

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7.     Development

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7.1     Scope

Subject to the terms of this Section 7, after exercise of its Option Right for a Collaboration Target and other than with respect to the Phase I Program, (i) subject to Section 7.3, Roche shall have responsibility for the conduct of all clinical development for Licensed Products in the Field in the Territory subject to the applicable sharing of Phase I Development Costs and Development Costs, (ii) Roche shall have responsibility for the design and conduct of all research and development of Companion Diagnostics for Licensed Products in the Field in the Territory, and (iii) Roche shall have the responsibility for the design of, and the right to conduct, all Clinical Studies for a given Collaboration Target involving Roche Clinical Compounds or Roche Marketed Products. Clinical development of Licensed Products in the Field in the Territory shall be overseen by the JDC subject to Section 7.3.

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7.2     Management

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For development of Licensed Products in Program 1, Program 3, and Program 5, Roche shall keep BPM informed of clinical development activities for Licensed Products in the Field in the Roche Territory and share the Development Plan through the JDC. Roche shall be responsible for all decision making with respect to clinical development of Licensed Products in Program 1, Program 3 and Program 5 in the Field in the Roche Territory.

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7.3     Development of Program 2 and Program 4

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7.3.1   Consensus and Label Pursuits

For development of Licensed Products in Program 2 and Program 4, the Parties shall strive to reach consensus on the Development Plan through the JDC with the intent to establish a global clinical plan that benefits both Parties in their respective regions for commercialization. If the JDC is unable to agree on elements of the Development Plan (as to Indications, Label Pursuits, or design of the global Clinical Studies), then Roche shall have final say with respect to the Development Plan where such Development Plan shall include no more than a total of […***…] (each a “Label Pursuit”) of which no more than a total of […***…] Label Pursuits may include simultaneous Pivotal  Studies) unless the Parties mutually agree otherwise, provided that if the Parties mutually agree to co-formulate a Combination Product involving Roche Clinical Compounds or Roche Marketed Products, then the Parties shall mutually agree to the applicable portion of the Development Plan. By way of example, triple negative breast cancer and hormone-receptor positive breast cancer shall be considered two (2) distinct Label Pursuits.

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7.3.2   Supplemental Studies

Roche shall have responsibility for the conduct of all Clinical Studies for Licensed Products in the Field in the Territory pursuant to the Development Plan other than Supplemental Studies.  In addition, after the first Regulatory Approval for a Licensed Product, to the extent that (a) a Party desires to conduct any Clinical Studies in a Label Pursuit for such Licensed Product that is not included in the Development Plan, (b) a Party desires to conduct any Clinical Studies for such Licensed Product that are specific to a Party’s portion of the Territory, or (c) a Party desires to conduct any Post-Marketing Studies or other post-marketing commitments as mandated or agreed to be conduct with a Regulatory Authority for such Licensed Product, in each case ((a)-(c)) for such Licensed Product that the other Party does not desire to co-fund (each a “Supplemental Study”), the Party desiring to conduct such Supplemental Study(ies) may do so at its own cost and expense in its Territory or in the other Party’s Territory, subject to the following limitations in this Section 7.3.2.

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If a Party wants to conduct a Supplemental Study for a Licensed Product in the other Party’s Territory, such Supplemental Study shall require the consent of such other Party, which consent shall not be unreasonably withheld by such other Party; provided that such consent may be reasonably withheld by such other Party if such other Party determines in good faith using industry-reasonable criteria that such Supplemental Study would likely cause commercial harm to such other Party or its Affiliates or Sublicensees in such other Party’s respective Territory.  At the request of the Party proposing to conduct such Supplemental Study, such other Party shall explain at the JDC the basis for its determination to withhold its consent to such Supplemental Study in such other Party’s Territory.  If the Party proposing to conduct the Supplemental Study believes that it is impractical or such Party will be unable to fulfill a post-marketing commitment mandated or agreed to with a Regulatory Authority unless such Supplemental Study is conducted in the other Party’s Territory, the Party proposing to conduct such Supplemental Study shall have the burden of demonstrating that it is impractical or unable to conduct such Supplemental Study unless such Supplemental Study is conducted in the other Party’s Territory.

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The other Party shall have the right (but not the obligation) (the “Supplemental Study Opt-In Right”) to access any study reports and data of such Supplemental Study(ies) that such other Party did not co-fund for purposes of Filing for Regulatory Approval in such other Party’s Territory by paying […***…] of the Development Costs incurred by the Party conducting such Supplemental Study.  

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For clarity, for Program 2 and Program 4 (i) conduct of Clinical Studies (including Supplemental Studies) in non-oncology Indications shall require mutual agreement of the Parties, and (ii) conduct of Clinical Studies (including Supplemental Studies) using Roche Marketed Products shall require the written consent of Roche.

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7.3.3   Shared Development Costs

Within sixty (60) days after exercising its Option Right with respect to each of Program 2 and Program 4, Roche shall provide BPM with an initial Development Plan and a budget for such Program outlining the planned activities and related Development Costs (“Shared Development Cost Budget”) for such Development Plan. The Shared Development Cost Budget shall include the anticipated Development Costs pursuant to the Development Plan for the remainder of the then current Calendar Year and each of the next two (2) Calendar Years expected to be incurred by each Party and in total. Thereafter, annually, the Development Plan and the Shared Development Cost Budget shall be updated by the JDC such that the Shared Development Cost

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Budget shall always reflect the planned activities under the Development Plan for three (3) Calendar Years. If a Party’s actually incurred Development Costs for the current Calendar Year exceeds […***…] of its portion of the Shared Development Cost Budget, such excess portion of Development Costs shall be entirely borne by the Party that exceeded its portion of the Shared Development Cost Budget provided that (A) BPM approved the amount included in the Shared Development Cost Budget specifically attributable to the activities conducted by BPM under such Shared Development Cost Budget, and (B) the JDC shall have the right during a Calendar Year to update the Shared Development Cost Budget in the event of (i) faster than planned Clinical Study enrollment, (ii) written guidance or requirements from a Regulatory Authority that would result in amendments to the Development Plan or (iii) mutual agreement by the Parties to amend the Development Plan, each of (i), (ii) and (iii) an “Allowable Exception”.  Additional Development Costs incurred in a Calendar Year resulting from an Allowable Exception shall be subject to sharing of Development Costs pursuant to Section 12.6.

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7.3.4   Deferrable Amounts

If the annual update to the Development Plan for such Program results in the Shared Development Cost Budget for the first remaining Calendar Year of the Shared Development Cost Budget increasing by more than […***…] from the then current Shared Development Cost Budget for the then-current Calendar Year or the second remaining Calendar Year increasing by more than […***…] from the then current Shared Development Cost Budget for such Program for the then-current Calendar Year, after taking into consideration any Allowable Exceptions, then BPM shall have the right to elect not to pay its share of actually incurred Development Costs for such Program for such Calendar Year exceeding such percentage of the previous Shared Development Cost Budget for such Program for such Calendar Year (such amount a “Deferrable Amount” and such election a (“BPM Deferral Election”)). If BPM makes a BPM Deferral Election, Roche may elect to either (i) deduct or withhold payments payable to BPM under Section 12.7, 12.8 or 12.9 until […***…] of the Deferrable Amount is repaid to Roche or (ii) increase the royalty rates payable by BPM to Roche under Section 12.9.3 by […***…] (e.g., the first royalty tier would become […***…]) until […***…] of the Deferrable Amount is repaid to Roche, provided that at any time BPM may elect to repay […***…] of such Deferrable Amount in part or in full to Roche in cash.  Notwithstanding the foregoing, BPM shall not have the right to make a BPM Deferral Election for any Calendar Year after the First Commercial Sale in the United States for any Licensed Product under this Agreement.

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The following is an example that illustrates a possible scenario involving a Licensed Product for a […***…]:

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In this example, the Shared Development Cost Budget was provided to BPM in June 2019 in millions of US dollars (US$ Millions) and BPM approved the costs of activities performed by BPM.

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